Phil Gibbs: Hey, Eddie, do you have an update on the project in Chicago and timing-wise, when does it start? Where are you through the process?
Eddie Lehner: Yes. So equipment is being installed, racks are up, some limited production is taking place in the value-add arena in long products processing. We should be fully operational in University Park by early April of 2024. It’s a big undertaking. As I referenced in the script, I mean, hard stuff, but smart stuff. I mean these things will ultimately make a big positive difference as we look to see our earnings stream become more consistent and higher through the cycle. But I’ll ask John Orth to maybe provide some additional detail on University Park.
John Orth: Thank you, Eddie. With regards to the investment at University Park, the work on the value-add side is actually ahead of schedule. And as Eddie mentioned, we are actually doing limited production now on the long product BA side. And our teams are really focused on bringing the automation to drive safety and productivity fully up to speed, and we absolutely see a clear runway to be fully operational in April of next year.
Phil Gibbs: Thank you. And then a couple of questions, just one on net working capital and one on pension. What are you anticipating for net working capital in the fourth quarter? Because I know, you did take some of the inventories down this quarter, which was a nice tailwind. But as you said, incomings are starting to stabilize? And then on the pension, I know rates have been climbing, which helps the liability, but the outcome of the remeasurement will depend on the mix of bonds and equities in the portfolio. So how does that potentially shape up if we just looked at it as is today, meaning if we mark-to-market the pension and open today? Thanks.
John Orth: Yes, sure. So I’ll kick it to Jim in just a second. I’ll give you some broader-based color on the question. Net working capital is going to come down. I think with some of the better news that’s occurred recently. It also means lead times are going to get stretched out. We know the mills are still struggling with on-time delivery issues on a mill-by-mill basis. So that’s sort of a built in, I would say, that’s a built-in regulator of how fast you can build inventories, even if you want to get a little bit long and you want to improve the quality of your inventory. So I mean, just given where our guidance is net working capital should come down. And we’re doing some good work around the pension and our legacy liabilities at present. So I’ll take it over to Jim, and he can give you a little bit more detail on — with respect to those questions.
Jim Claussen: Yes. Thanks, Eddie. I think Phil, I think Eddie pretty much covered the working capital question. The only thing I would append on to that is as with less shipping days in Q4, we’d also expect our nominal AR balance to fall a little bit as our weather day sales outstanding are fairly consistent. On the pension front, certainly, obviously, the re-measurement will occur at the end of the year with discount rates and asset returns taking into account. What I would say is we have gone through very thoughtful exercises in the past several years with either annuitizations to derisk the plan or some lump-sum payouts in order to take that liability down far lower than it was historically, and we’ll continue to do that work.
Phil Gibbs: Thank you.
Eddie Lehner: Thanks, Phil.
Operator: [Operator Instructions] We’ll now take a question from Alan Weber with Robotti Advisors.
Alan Weber: Good morning. How are you?
Eddie Lehner: Hi, Alan. Good morning. How are you?
Alan Weber: Safe. So can you talk about the ERP kind of two things, well, it’s maybe three. What you hope — when it will be complete? What you hope it accomplishes? And then, where it fits in as you’ve often talked about customer service?
Eddie Lehner: Yes, absolutely. So, some of brown stand, so I’m perpetually hopeful. ERP is difficult, Alan, it’s just as difficult. When you finally make the decision — we made the decision at the right time, we finally had to make that call. I mean before COVID, we had done ERP conversions maybe one at a time, slowly getting to a common ERP environment on every key. And there’s always puts and takes when you do that. You definitely take hits in the short-term. There’s no question about it. But if you really want to — if you want to engineer your way to a — if you want to engineer your way towards your strategic objectives, especially around the customer experience and you want to digitalize your network, you really need to have that uniform platform.
So you’re not confident developing in two to three to four different environments, and there’s a lot of other costs you have to carry when you do that. So, you really want to have a congruent and uniform master data environment, which really allows you to offer next-level services to your customers very quickly, very efficiently in a way that you should be able to garner repeat business when it’s done. So it’s a big undertaking. It’s a big investment. But ultimately, it’s an investment you have to do if you want to elevate yourself to the next level, when it comes to things that we talked about before, such as, our e-commerce capabilities, our ability to quote really fast, our ability to develop AI use cases which we have a couple in development, for example.
So I — there’s no way you can get around it. You just have to do it. And it’s not easy. But the rewards are there on the other side as you begin to assimilate that digest that and then you can develop again on that one uniform platform that runs your business transactionally by the second, by the hour, by the day, so on and so forth.
Alan Weber: So I guess I was still unclear, though, I realize it’s one of these things where you’re never fully done, I guess, in some ways, but when do you really start to see kind of the benefits of the investment?
Eddie Lehner: You see the benefits of the investment. Usually, I would say, it’s going to take from the time that the conversion is finished, it usually takes six to nine months before the business unit that’s converting really learns the rules and the controls of the system and how to use this, especially when they’ve been using — when they’ve been transacting in a legacy environment for a long time. So it’s usually six to nine months. We have one of our biggest multi markets, is in the process of converting now. We’ve got a couple of smaller divisions that are going to convert in the first quarter of next year, that we’re going to take a nice long pause, and we’re going to settle in. And I believe at that point in time, once we get past Q1 of 2024, we’re going to start to see good returns from our investment, as we move through the balance of the year, depending on the macro of course. But I think that really helps our self-help initiatives going forward.
Alan Weber: Okay. Great. Thank you.
Eddie Lehner: Thanks, Alan.
Operator: And it appears there are no further telephone questions. I’d like to turn the conference back to our presenters, for any additional or closing comments.
Eddie Lehner: I’m wishing everyone a safe, healthy and enjoyable holiday season. We look forward to being with all of you in the New Year to discuss Q4 and full year 2023 results. Take care. Thank you.
Operator: And once again, that does conclude today’s conference. We thank you all for your participation. You may now disconnect.
