Worthington Industries, Inc. (NYSE:WOR) Q3 2024 Earnings Call Transcript

Worthington Industries, Inc. (NYSE:WOR) Q3 2024 Earnings Call Transcript March 21, 2024

Worthington Industries, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Hello, and welcome to the Worthington Enterprises Third Quarter Fiscal 2024 Earnings Conference Call. All participants will be in a listen-only mode, until the question-and-answer session of the call. This conference is being recorded at the request of Worthington Enterprises. If anyone objects, you may disconnect at this time. I’d now like to introduce Marcus Rogier, Treasurer and Investor Relations Officer. Mr. Rogier, you may begin.

Marcus Rogier: Thank you, Sarah. Good morning, everyone, and welcome to Worthington Enterprises third quarter fiscal 2024 earnings call. On our call today, we have Andy Rose, Worthington’s President and Chief Executive Officer; and Joe Hayek, Worthington’s Chief Financial and Operations Officer. Before we get started, I’d like to note that certain statements made today are forward-looking within the meaning of the 1995 Private Securities Litigation Reform Act. These statements are subject to risk and uncertainties that could cause actual results to differ from those suggested. We issued our earnings release yesterday after the market close. Please refer to it for more detail on those factors that could cause actual results to differ materially.

In addition, our discussion today will include non-GAAP financial measures. A reconciliation of these measures with the most appropriate comparable GAAP measure is included in the earnings press release, which is available on our investor relations website. At this point, I will turn the call over to Andy for opening remarks.

Andy Rose: Thank you, Marcus, and good morning. I want to welcome everyone to our first full quarter as Worthington Enterprises. We’ve hit the ground running and are already delivering solid results as evidenced by our adjusted EBITDA of $67 million and adjusted earnings per share of $0.80. While there are a number of one-time items mostly related to the separation which Joe will run through, we are proud of our people and their ability to stay focused over the past year. I remain as excited as ever about Worthington Enterprises and our opportunity for long-term value creation. Our consumer products, building products, and sustainable energy businesses represent a strong franchise of market leading products and brands that will enable people to live safer, healthier and more expressive lives.

We have a unique and proven growth platform that has been purposefully created using deep industry expertise, a performance driven people first culture and the best employees in the world, and a thoughtful long term investment strategy. We find the best product opportunities, invest to drive value at scale and build sustainable advantage through safety, quality, service and a reputation for doing the right thing for our customers. The Worthington business system of transformation, innovation and M&A is well entrenched and enables us to grow faster and deliver on our number one goal of generating attractive returns for our shareholders. Our transformation playbook now in its third evolution continues to provide a systematic approach for improving our commercial operations and supply chain functions, enhancing the top and bottom line for our businesses.

Innovation is now a deeply embedded competency that we put to work across our business from process innovation to new product development, which we intend to make best-in-class with a pipeline that will distinguish us from competitors and provide enhanced value to our customers. And finally, our expertise in strategic M&A will help us drive growth and higher returns as we add new products, new brands and consolidate markets. To that end, we recently welcomed HALO products into our portfolio of brands, offering an innovative collection of pizza ovens, pellet grills and griddles that is disrupting the outdoor living space. This acquisition immediately accelerates years of product development for us with its lean and capable team. And while its early days, the company is already benefiting from our relationships with major retailers and gaining greater access to our capital and expertise to drive accelerated direct-to-consumer marketing and sales.

This is a nice example of the Worthington business system at work and how we build market leading businesses. We’re disciplined stewards of capital, not only making new investments to deliver long term value creation, but also redeploying capital in situations where we can earn a better return. We’re off to a good start in our first quarter as Worthington Enterprises. And Joe will now walk you through the numbers.

Joseph Hayek: Thank you, Andy, and good morning, everyone. Q3 was our first standalone quarter as Worthington Enterprises, and given the recent business separation, we’ve recast our historical income statement and balance sheets for periods prior to December 1, 2023 to reflect Worthington Steel as discontinued operations. As a result, there is and will be some noise in our reported financials, but we will attempt to call out unique items and adjustments to facilitate year-over-year comparability of the business performance. In Q3, we reported GAAP earnings from continuing operations of $0.44 a share versus $0.60 in the prior year. There were several unique items that impacted our quarterly results, including the following. The current quarter was negatively impacted by one-time discrete tax charges of $9 million or $0.18 a share, all related to the business separation.

In addition, we incurred pre-tax expense of $3 million, or $0.05 a share related to the separation in the current quarter. We do not anticipate having additional separation costs in future quarters. We also took advantage of the current interest rate environment to annuitize our only remaining legacy defined benefit pension plan, which resulted in a non-cash pre-tax charge of $8 million or $0.12 a share. We incurred modest restructuring charges, which negatively impacted earnings by a $0.01 per share in the current quarter. And lastly, results in the prior year quarter were negatively impacted by $0.21 a share due to several unique items, the largest being corporate costs that were eliminated at the time of separation along with smaller restructuring and other non-recurring items.

Excluding these items, we generated adjusted earnings from continuing operations of $0.80 per share in the current year quarter compared to $0.81 a share in Q3 of last year. Additionally, our building products business recorded a one-time pre-tax charge of $2 million, or $0.03 a share in the current quarter, related to a lower of cost or net realizable value adjustment on propane tanks that were imported from a third-party supplier in Europe. The LCM was primarily driven by higher than expected transportation costs for those tanks. Consolidated net sales in the quarter of $317 million decreased 8.5% from $346 million in the prior year. The decrease was driven by lower sales in building products, which experienced an unfavorable product mix, and slightly lower volumes during the quarter, partially offset by slight increases in sales within consumer products and sustainable energy solutions, which both benefited from increased volumes.

Gross profit for the quarter decreased to $73 million from $79 million in Q3 a year ago, while our gross margin increased to 23.1% from 22.8%. Including the $2 million charge in building products, our adjusted EBITDA in Q3 was $67 million, down from $70 million in Q3 of last year. And our trailing 12 months adjusted EBITDA is now $279 million, and our trailing 12 months adjusted EBITDA margin is 21.5%. With respect to cash flows in our balance sheet, cash flow from operations was $50 million in the quarter and free cash flow was $40 million that would have been higher if not for $13 million in cash outflows related to the business separation. During the quarter, we invested $10 million on capital projects, which included $5 million related to our previously mentioned facility modernization projects.

We also spent $9 million to acquire an 80% interest in an affiliate of HALO products group and paid $16 million in dividends, which represented the larger pre-separation Worthington Industries’ dividend that was paid in December. We also received $40 million in dividends from our unconsolidated JVs during the quarter, a 93% cash conversion rate on that equity income. Looking at our balance sheet and liquidity position. We ended the quarter with an exceptionally strong balance sheet, $298 million of long term funded debt carrying an average interest rate of 3.6%, combined with $227 million in cash that is yielding around 5%. We continue to operate with extremely low leverage, ending the quarter with a net debt to trailing EBITDA leverage ratio of about a quarter turn, and we’re well positioned for the future with ample liquidity having a $500 million undrawn bank credit facility.

Yesterday, the Worthington Enterprises Board declared a dividend of $0.16 per share for the quarter, which is approximately $8 million and will be payable in June of 2024. We’ll now spend a few minutes on each of the businesses. In consumer products, net sales in Q3 were $133 million, up slightly from $131 million a year ago. The increase was a result of higher volumes, which were partially offset by lower average selling prices. Adjusted EBITDA for the consumer business was $26 million and adjusted EBITDA margin was 19.3% in Q3 compared to $21 million and 16.1% last year. We experienced a strong sequential improvement with volumes increasing 19% compared to Q2 as a result of some storm and weather related demand as well as recent market share gains at Level 5.

Though some demand may have been pulled from Q4 into Q3, we’re cautiously optimistic heading into the spring as people begin to enjoy the outdoors more frequently and begin to take on more repaired and remodeled projects. During the quarter, as Andy mentioned, the consumer business acquired an 80% controlling interest in an affiliate of HALO Products Group for approximately $9 million. HALO is an innovative asset-light provider of tech enabled products including pizza ovens, pellet grills, griddles and accessories that complement our other leading outdoor living brands like Coleman portable propane tanks and Bernzomatic torches, fuel and accessories. HALO is a natural match with these products and creates a powerful combination. While HALO is small today, with 2023 revenues of $7 million, which was primarily direct-to-consumer, we intend to leverage our strong relationships with channel partners to help further grow and scale the brand.

We’re excited to have HALO as part of our consumer business and we welcome that talented team to Worthington. Building Products generated net sales of $148 million in Q3, down 19% from $184 million a year ago. The decrease was driven by a less favorable product mix, lower average selling prices and lower volumes, especially in the large format heating end market which continued to see destocking. Building Products generated adjusted EBITDA of $53 million for the quarter and adjusted EBITDA margin was 35.8% compared to $58 million and 31.6% in Q3 of last year. Results in the current quarter were negatively impacted by the $2 million due to the LCM on imported tanks that I mentioned earlier. The destocking we continue to see in our heating end market, should run its course by the summer and we’re optimistic that that demand will return to more seasonally normal levels thereafter.

Additionally, our water business continued to show growth in revenues and margins in Q3 as the initiatives we put in place in early 2024 are having a positive impact. During Q3, the water team also continued the launch of our Amtrol Titan well tank with two new sizes. The Titan is a patented composite tank that combines the strength of steel, and the advantages of high tech composites providing superior impact resistance and UV protection. WAVE delivered very strong results, contributing equity earnings of $26 million in the quarter, up from $19 million a year ago. The team at WAVE continues to focus on refining and enhancing their value proposition to customers, and they saw both volume and margin improvements in the quarter. ClarkDietrich also continued to perform very well and contributed $18 million in equity income for the quarter.

Though their results were down $1 million compared to the prior year quarter, they were up $4 million sequentially from Q2. The ClarkDietrich team is leveraging its national presence and benefited from higher volumes in Q3, which was offset by some margin compression. In sustainable energy solutions, net sales in Q3 of $35 million were up 11%, or $4 million from the prior year, primarily due to higher volumes, which were partially offset by lower average selling prices and an unfavorable product mix. SES reported an adjusted EBITDA loss of $3 million in the current quarter compared to breakeven results in the prior year, due to lower gross margins and several one-time expenses. In the current environment, the SES team continues to focus on near term cost controls and long term investments as they attempt to balance current market conditions with the exceptional growth opportunities that we believe will materialize as the hydrogen and CNG ecosystems grow.

During the quarter, the team had success getting additional new products certified and customer ready, and quoting activity continues to improve, which should ultimately result in a better demand environment. At this point, we’re happy to take any questions that people might have.

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Q&A Session

Operator: Thank you. [Operator Instructions] Your first question comes from the line of Daniel Moore with CJS Securities. Your line is open.

Daniel Moore: Thank you. Good morning, Andy. Good morning, Joe. Thanks for taking the questions.

Andy Rose: Good morning, Dan.

Joseph Hayek: Good morning.

Daniel Moore: Maybe start with where we finished off there at the tail end of the comments on the JVs. What can you tell us about demand and activity levels both at WAVE and ClarkDietrich on a forward looking basis? I know you don’t quote backlog, but how would you describe the level of new business coming into the pipeline relative to maybe six months ago or this time last year?

Andy Rose: Yeah. It’s a fair question. I think the markets have evolved in that construction space. For instance, WAVE, whose mix of repair and remodel versus new is typically 65% to 70% repair and remodel, it’s higher now. In part because the new spend is down. Their mix of end markets, our estimates of those, at least. It’s still kind of tough letting in commercial buildings that are office centric, but also in commercial, you have lots of other things, including data centers, which is showing good growth, but 70% of their end markets we believe are non-commercial, right. They’re a mix of healthcare, education, retail, and sort of transportation projects. And so volumes seem steady there, ClarkDietrich there’s a little bit of a different mix there, slightly more new there, they’re broadening the types of projects they’re working on, not because they’re super focused on X, Y or Z, but just because it’s where construction is happening.

And so, we think that as construction and activity kind of came down, it seems to be more sort of flat, now, it’s not continuing to go down, at least right this minute, nor is it going straight up. I think the architectural billings index, that came out yesterday or the day before was 49.5%, which is just below 50%. It was 45% the last few months. It was — I think the last time it was at 50% was April of last year. That’s a good sign. I think we mentioned in December that the activity level, not the billings, but activity with architects had started to pick back up, which is typically a precursor to billings. But that also takes, when you see a good AVI, that takes 12 months to 24 months to show up in somebody like ours’s revenue or ClarkDietrich or WAVE.

And so, we generally still feel very good about the spaces that they’re in kind of mid to longer term, I call it a bit murky out there in the short term.

Daniel Moore: Very helpful. Maybe switching gears, still early days, obviously, but maybe just update us on progress in the direct-to-consumer channel. Obviously, a key capability of Level 5, now you’ve tacked on HALO any tangible examples of products you’re now offering or plan to offer DTC that perhaps you didn’t historically and just progress in general in that channel?

Andy Rose: Yeah. I think, Dan, the short answer is that when we acquired Level 5, we acquired not only a new set of products, but we acquired a capability. And it really helped us — really helped open up our eyes in terms of the direct-to-consumer channel. And so the team and consumer really is looking across the product line to figure out which products we think we can sell into that channel. And HALO — excuse me, HALO is another example of a product that is sold direct-to-consumer only right now. And so that’s part of the overarching strategy, now, when we either develop new products or acquire new products is looking across all the channels direct-to-consumer and using and leveraging big box retail relationships to sort of maximize the opportunity for those products. So I wouldn’t say there’s one opportunity there’s probably a bunch of opportunities where we’re looking to sort of leverage those capabilities.

Daniel Moore: Helpful. Last one for me. I’ll jump out. I think you mentioned, put a little bit of potential pull forward in demand in the consumer side from Q4 to Q3. Any details there, or can you quantify that at all? Thanks again for the help, and congrats on a really solid quarter.

Andy Rose: All right. Thank you. And yeah, sure. The consumer business, particularly our camping gas cylinders to a lesser extent, the torches that go with those, there is a little bit of weather related spike demand from time-to-time. And so if you remember in January, the polar vortex and then the storms that were kind of back to back across the country really created a need because those products are sometimes used as emergency heat sources and they’re certainly used to repair pipes that break. If you — not to become a weather man, but if you get past those two events, the weather in the winter has been relatively benign. And so we feel really good about the spring and the season and how we’re positioned and how we’ve helped our retail customers get to where they want to be and to where they’ll be able to best serve their own customers.

But sometimes that spike demand can really move things from a month to a month, that’s the reason for kind of some of our — I’ll call it cautious optimism in Q4.

Joseph Hayek: Yeah. The storms are incremental demand. The question and it’s hard to predict is was there pull forward or not? And the answer is, if our retailers are fully prepared and fully stocked, there may be a little bit of pull forward, but it’s again, it’s not an exact science in terms of estimating it.

Daniel Moore: Understood. Thank you again.

Andy Rose: Sure.

Operator: Your next question comes from the line of Susan Maklari with Goldman Sachs. Your line is open.

Susan Maklari: Thank you. Good morning, everyone.

Andy Rose: Hey. Good morning, Susan.

Susan Maklari: Good morning. I’d like to start with the price for a bit. Can you just give us more color on what’s driving that lower? Is it mix, is it absolute declines in there? What’s going on in there and how are you thinking about that going forward?

Joseph Hayek: Yeah. I think your question was around pricing.

Susan Maklari: Yes.

Joseph Hayek: Okay. Yeah. So, it’s mostly mix, honestly, the dynamics within consumer and in building products. I got Building Products, for example, the destocking in those very large propane heating tanks. Those are our most expensive tanks and they come at pretty healthy gross margins. So there’s an outsized impact when those are running up or in this case, destocking.

Susan Maklari: Okay. All right. And then perhaps turning a bit to the outlook, you mentioned the potential for this pickup as we get into the spring and summer. Maybe some lift in the R&R activity. I guess when you think about the macro backdrop and some of the more recent news and data points, just any thoughts on how that could come through to the business and how you’re thinking about the setup more broadly there?

Andy Rose: Yeah. I think — I would maybe call it, sort, of pretty close to seasonally normal with some continued I think what we say cautious optimism, but — and you’re right, the data points out there are still a little bit mixed. And so, it’s certainly not worse than it was six months ago, but again, the consumer is still relatively cautious. We still have some destocking in these large and good size margin propane tanks. And so, yeah, I would say that we continue to be thoughtful about our markets. Our teams have done a phenomenal job, being there for their customers. We haven’t — at least we don’t think we’ve lost any share in a lot of these categories. But ultimately, higher interest rates matter. If you look at the large propane tanks, for instance, and you look at kind of housing starts and then our demand there, there’s about a six months to 12 month lag in how those have worked for us in the last several years.

Housing starts, I think, bottomed like last summer, kind of July, and have kind of crept back up since. But because of that lag in residential construction, at least, we anticipate needing another kind of quarter or quarter and a half for that to run its course.

Susan Maklari: Okay. That’s helpful. And then, just one last one for me. It was exciting to see the HALO acquisition come through. Can you give us just an update on the overall M&A pipeline, how that’s coming through and anything that is of interest perhaps there?

Joseph Hayek: Sure. As M&A activity in 2022 and 2023 really sort of slowed down, that was okay for us, right, because we were in the midst of the spin. Activity in 2024 has certainly been predicted to pick back up. We’re hopeful that is the case, it’s still early in 2024. I don’t think you’ll see us acquire a lot of companies smaller than HALO, that was a really good opportunity for us, as Andy said, to really fast forward a bunch of product development and be able to really grow and leverage what we do to make that business better. But, we have a pretty robust program of making outbound calls and trying to be as smart as we can, knowing who the right fits for us are in Building Products and in Consumer Products right now, less in the SES business.

Some are pretty large, some are not as big and more bolt-ons. But there’s nothing that we’re kind of getting ready to announce or anything and burn a hole in our pocket. But we continue to be out there and as we said have a really good balance sheet and some liquidity so that when we find the right fit, we’ll be able to think about that. But going back to our criteria for those, they’re going to be margin risks, they’re going to be asset-light, and they’re going to have a sustainable competitive advantage that we think we can either leverage or have it even make us better.

Susan Maklari: Okay. All right. Well, that sounds great. Thanks for all the color and good luck with everything.

Joseph Hayek: Thank you.

Operator: Your next question comes from the line of Kathryn Thompson with Thompson Research Group. Your line is open.

Brian Biros: Hey, good morning. This is actually Brian Biros on for Kathryn. Thank you for taking my questions.

Andy Rose: Sure. Good morning, Brian.

Brian Biros: Maybe further on the JVs, I think the past few quarters has kind of seen the two go in kind of opposite directions almost and probably not always the case. Maybe more of a short term blip just given how markets have been recently. I guess do you think that dynamic is kind of over going forward? Seems like maybe it is a little bit, given your comments about ClarkDietrich, kind of stabilizing from here, but just interested to hear your thoughts on how those two may or may not be linked in momentum going forward.

Andy Rose: Yeah. I mean, if you think about the products, Brian, ClarkDietrich tends to be more on the front end of construction. WAVE, a little more on the back end of construction. So as the cycles move up and down, they’re going to not move in lockstep if that makes sense. Joe kind of talked about it earlier. The market for overall commercial construction products is pretty steady. There’s pockets of weakness, which is office everybody knows and talks about that. But there is a bit of a belief, I think, that there could be a renovation renaissance of sorts that comes from companies trying to attract workers back to the office and changing up things to make it more appealing to be there, as well as some of the other kind of macro trends around reshoring, nearshoring healthcare, education.

Those markets continue to be pretty strong. So it’s a little hard to predict, if those businesses are going to kind of move together. But their demand, I would say, is reasonably steady right now.

Operator: [Operator Instructions] Your next question comes from the line of Brian McNamara with Canaccord Genuity. Your line is open.

Brian McNamara: Hey. Good morning, guys. Congrats on the results.

Andy Rose: Good morning.

Joseph Hayek: Thank you, Brian. Good morning.

Brian McNamara: I hate to put you on the spot, Joe, but I’m going to, I get a lot of questions about the earnings power of the business for maybe some folks new to the story, kind of, can you put up some guardrails in terms of how we should look at the business in terms of both the gross margin side and then, how that flows into EBITDA margin, if you wouldn’t mind?

Joseph Hayek: Yeah. Our gross margin for the quarter was 23.1% and it’s going to be a little different by business. Historically, the consumer products business is going to have higher gross margins just based on what they do and maybe a little bit higher SG&A as a percentage of sales as well. But when we see consumer at kind of 19.3% EBITDA margin in the quarter, that’s kind of what we think and they think good looks like for them. They get good volumes and ultimately you can kind of hang in there, that number around there or better, then we feel really good about it, as revenues grow. The gross margin for Building Products on the heating, cooling and water side of the business was really strong this past quarter. I think it was 6.2%.

They had 130 basis points of that was the LCM that we talked about, which we certainly believe is non-recurring. So that would be adjusted 7.5%. It was 11% a year ago. This is the EBITDA margin I’m talking about, 11% last year. And so, I think you get a normalized environment and you’re certainly significantly higher than 6.2%, got some good things going on there, in the water business you will get through this destocking in the larger propane businesses. And those guys, and that team, I think are absolutely focused on doing the right things. The water business is showing great progress. We talked about some of the businesses historically as kind of having more upside and not really running at full speed. That’s one of them. But there’s big improvement there.

And then the core business continues to think through what’s happening now. But you go back to kind of Andy’s comments on innovation and new product development there’s a lot going on, a lot of good work being done that we think can add both to top line and to margins.

Andy Rose: Yeah. And maybe just to take it up a level Brian, if you think about our long term goals of driving our EBITDA margin up to 24% over the next three to five years, everything that we do is very much focused on that, our transformation playbook is about improving the profitability and the margin profile of the businesses we own today. And as we think about M&A and capital that we’re going to deploy into our innovation pipeline there again, we’re looking to drive not only higher margins, but also higher return on capital. We talk a lot about returns and making more money using less capital where possible. So I think the fact that the businesses are where they are today, there is upside there. But over the long run, we fully expect that we’re going to drive higher margins, and that’ll start at the gross margin line.

Brian McNamara: That’s really helpful, thanks. Just one more for me. I think all my other questions have been answered already. I’m just curious, relative to your Joe or Andy or both of you, relative to your own expectations heading into the separation, I’m curious, have you run into any surprises, either good or bad, in your first kind of three or so months as a separate entity?

Andy Rose: Yeah. I would say the process has been exceptionally smooth. On the surface there’s been a few struggles underneath the surface, but nothing that’s really major. I mean, look, when you take a company that was put together over 68 years, and you try and separate it into two public companies, that’s a lot of work by a lot of people you talk about the IT group separating systems, the finance group having to recast financials, which continues to this day. So there’s just a ton of work, and it’s never perfect, but I would say it’s been an exceptional performance by everybody involved. And we’re fortunate that we get to sit here and kind of on the surface talk about it. But it’s been a tremendous effort and success, I would say, really across the Board. I mean, I don’t know if there’s anything else to add there, Joe, but we’re really proud of everybody that has been a part of it.

Brian McNamara: That’s great. Thanks a lot, guys. Best of luck.

Andy Rose: Thanks.

Operator: Your next question is a follow-up from Kathryn Thompson. Your line is open.

Brian Biros: Hey, guys. It’s Brian.

Andy Rose: Brian she keeps calling you Kathryn, I hope you appreciate that.

Brian Biros: I’ll stick to Brian for today. I had a quick follow-up. I might have got off earlier. In the Building Product segment, I know you guys have called out mix kind of impacting the sales. Overall, though, volume seemed pretty good relative to the destocking going on there. I think only down 2%, I know you touched on it in the opening comments and some of the responses here, but can you just maybe further parse out what was maybe up or down across the different products in that category type? You called out propane, you called out water, anything else to specifically call out? Because it seems like there’s maybe some pretty good stuff going on there that might be masked by the propane destocking in the short term here.

Joseph Hayek: Yeah. That mean if you get away from the LCM, which again, we think was one-time, its couple million dollars. The big factor was mix, honestly and it’s that destocking in those largest propane tanks, every kind of I think facet around home goods, building products, some consumer goods, right, had a post-COVID run up and then kind of a post-COVID trough. That’s just what’s happening in that business. The water business was solid, our other businesses — a couple of other businesses were around some of the large kind of refillable refrigerant tanks. Those sort of slowed year-over-year just because of the same dynamics that destocking. But other than that, there were a couple of puts and takes, but those are the real drivers.

Brian Biros: Thank you.

Andy Rose: Sure.

Operator: There are no further questions at this time. I’ll turn the call to Andy Rose for closing remarks.

Andy Rose: So, as I said last quarter, we’re proud of our history and who we are today, but we’re mostly excited for our future. We’re determined to leverage our capabilities to reward our employees, our customers, our suppliers, and our shareholders. As our Founder, John McConnell once said in a speech in 1980, we’ve only scratched the surface. That quote is as true today as it was back then and I think it represents how we all feel about Worthington Enterprises and the opportunity in front of us. Thanks for joining us today. We’ll see you in the next quarter.

Operator: This concludes today’s conference call. We thank you for joining. You may now disconnect your lines.