Worthington Steel, Inc.

Good morning and welcome to Worthington Steel's third quarter fiscal year 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to Melissa Dykstra, Vice President of Corporate Communications and Investor Relations. Please go ahead.

Thank you, Operator. Good morning and welcome to Worthington Steel's third quarter fiscal year 2026 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 materially from those suggested. We issued our earnings release yesterday after the market closed. Please refer to it for more detail on 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 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 made available later today on WorthingtonSteel.com. Now, I'll turn it over to Jeff Gilmore.

Good morning, and thanks for being with us today. It's been a memorable few months for us, to say the least. As most of you know, in January, we announced our proposed acquisition of Klopner, which will be the largest in our history and a meaningful strategic step for the company. I appreciate that even with an announcement of this size and the work that goes with it, our team stayed anchored in what matters, safety, serving customers, and improving the business every day. Thank you to the entire Worthington Steel team. This quarter, I'll start with an update on the Klockner acquisition. The combination of our two organizations will create a larger, more diversified metals processing platform with meaningful opportunities to generate value and capture synergies through Worthington's proprietary base business improvement program that we call the Transformation. This transaction is being executed through a voluntary public tender offer in Germany and remains subject to the tender process and required regulatory approvals. Since our investor call in January, the voluntary tender offer has been launched. We have submitted requests for regulatory approval in the required jurisdictions, and we are beginning to see approvals come through. Overall, the process is progressing well. Today is the final day of the initial acceptance period of the tender offer process, and we are confident we will secure enough shares to meet the 57.5% minimum threshold. We continue to expect the transaction to close in the second half of the calendar year. In preparation for closing, we've begun internal planning focused on integration, governance, and day one readiness. We're doing that responsibly and deliberately with an eye toward maintaining our high-performing cultures, unlocking value, and accelerating growth. Most importantly, this deal is about combining two great companies that share the same values. I've had the opportunity to spend time with several of our future Klockner teammates, and it reinforced our view that Worthington and Klockner are culturally aligned and fit together very well. Furthermore, since our announcement, the response from customers, suppliers, and investors has been overwhelmingly positive. As a reminder, the German public company takeover process is highly structured, and we will continue to provide updates as we reach key milestones. With that, let's turn to our results for the third quarter. Net sales were $769.8 million. Adjusted EBITDA was $41.6 million. And adjusted earnings per share were 27 cents. On a macro level, the third quarter of our fiscal year was volatile and uneven, with galvanized spreads remaining compressed and the effects of the holidays and winter weather dampening and delaying industrial activity. While direct volumes were up over the prior year, overall conditions were stable to soft. keeping customers' inventory disciplined and highly sensitive to interest rates and uncertainty. Even with those headwinds, our execution remains strong where it matters most, safety, customer service, and transformation. Commercially, the team continued to win the right work and capture high-value opportunities, including building on our momentum in the automotive market. Our direct shipments in Q3 to the Detroit tree increased by approximately 13%, significantly outpacing the reported 3% growth in Detroit tree production for the quarter. As discussed last quarter, the outlook for the automotive market heading into calendar year 2026 remains cautiously optimistic. Conditions appear to be moving toward a more robust market later in the year. That view is supported by growing confidence that a USMCA agreement will be completed in 2026, removing a significant amount of market uncertainty. Turning to agriculture, we believe we are nearing the trough of the market cycle and that a slow rebound will begin in late calendar year 2026. On a positive note, our team has been able to secure new business with a key customer in this market, which will continue to ramp up over the next few quarters. In construction, conditions remain flat in most segments. We expect to see data center growth continue, and as lower interest rates take hold, we believe we will see some expansion in the second half of 2026 due to pent-up demand. And in heavy truck and trailer, as we expected, The market started off slowly in counteryear 2026. We are more confident about the back half of this year, where we expect to see a pickup in both the Class 8 truck sector as well as the trailer market. Looking ahead, we are still cautiously optimistic about the second half of counteryear 2026. Overall, the backdrop looks modestly encouraging as key economic indicators show a return to expansion. With that market context, let me turn to our strategic priorities. We continue to make progress in the areas that matter most, investments in electrical steel growth, innovation, and transformation. In electrical steel, we advance the projects that underpin our longer-term growth strategy. In Canada, we have shifted some production to our new facility and are shipping from both locations. We will finish moving the existing equipment and production to the new facility over the next few months. We have more than 60% of the increased capacity sold for the facility. We're sequencing the startup to protect performance and service levels, and we expect to fill the balance relatively quickly as the facility ramps up. Our traction motor lamination facility expansion in Mexico is also on track and will begin shipping production parts this quarter. Almost all the OEMs tied to the expansion are experiencing some type of OEM delays. Previously, we expected to reach full production levels in fiscal 2028. However, the OEMs have pushed out a number of the programs for a variety of reasons. While timing is shifting on production starts for some of our new programs, When these platforms reach full production volumes in fiscal 2029, we will be at 75% capacity based upon current contracts. These delays are not surprising as many automotive OEMs are rethinking their electrification strategy. With the elimination of the fuel economy mandate and the elimination of the $7,500 federal tax credit, the market is clearly pivoting away from a government-driven BEV mandate to a consumer-led demand for hybrids. The data is quite clear. Year over year, hybrid sales in the U.S. increased 18% in 2025, and the same trend is happening in early 2026. Sales and production of hybrids are both up more than 10%, and the shift to hybrids is expected to continue. We are also seeing reports of increased consumer interest in hybrid and full electric vehicles due to rising oil prices and geopolitical tensions. While it is too soon to see if this will translate into sales, we will be watching closely and are well positioned to capitalize on this renewed interest. From a commercial standpoint, we have seen a slowdown in quotes for pure BEV opportunities, but the quote activity related to hybrids is picking up. We are excited by the growth in hybrids as we have the opportunity to produce the electrical steel laminations for a hybrid traction motor, as well as the specialty cold rolled steel used in the powertrain for the hybrids internal combustion engine. We continue to improve our business and find efficiencies using the Worthington business system and artificial intelligence. In one notable project, we used our transformation process to implement a lean flow operating model at our Delta Ohio facility that aligns material release, production and purchasing directly to customer demand, replacing a forecast driven push process with a more disciplined pull approach. This allows us to tighten our purchasing windows and drive down inventory. The work has led to 60% fewer coils held in our work and process bay, and an overall reduction of six days of inventory over the past 26 months. As the next step in the process, we will be adding predictive AI tools to ensure our flow is not only disciplined, but also predictable. That means spotting problems earlier and moving more quickly to remedy them. Predictive flow helps us stabilize performance as we run leaner, enabling faster, more consistent decisions at lower working capital levels. Further, we will use what we learn at Delta, package what works, and build scalable solutions we can use across our footprint. We also continue to make progress transforming our administrative functions. When we stepped back and looked at where we started about a year ago, a few themes stood out. There was a significant amount of manual, repetitive work, a fair amount of variation to how processes were executed across functions and facilities, and much of the work was being managed through email, spreadsheets, and manual follow-ups. We are addressing that in a couple of ways. First, where we see discrete opportunities to remove manual effort, we move quickly using automation and AI. For example, we are developing an AI agent for daily cash posting in our finance group that is expected to eliminate a significant amount of manual data entry and free up about 30 hours per month of analyst time. We've also deployed automation in accounts payable that is reducing manual invoice interventions and should remove roughly 150 hours of work per month as the models continue to improve. And in our order-to-cash process, robotic automation that reconciles shipping notices with customer portal data has helped accelerate cash collection and reduce past due balances. Second, for workflows that are more interconnected, we're using AI to assist us in mapping processes, establishing standard work, and removing waste. For instance, in indirect purchasing, we redesigned the sourcing workflow and then layered in analytics and AI tools that allow the team to focus more on strategic sourcing rather than repetitive tasks. We're still early in this part of the transformation journey, but what we are building is a repeatable capability that allows us to apply automation and AI across more processes and functions over time, structurally improving efficiency and scalability across the organization. To close, while this was a challenging quarter from a macroeconomic standpoint, our team remained focused on executing the business, advancing our electrical steel strategy, and moving the Klopner process forward in a disciplined way. At the center of that is a culture that puts safety first and reflects the dedication of our people across the organization. To our employees, thank you. The discipline, care, and commitment you bring every day are what turn our strategy into action. I'll now turn the call over to Tim for more detail on the financials for the quarter.