Metallus Inc. Price & Performance (MTUS)

Please refer to our SEC filings, including our most recent Form 10 ks and Form 10 Q and the list of factors included in our earnings release, all of which are available on the Mattelis 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, [indiscernible] [indiscernible] 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 strengthened 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, tag out, try out procedures, and enhance our safe work permit processes for non routine tasks. Our commitment to safety is evident in our investment of approximately $8,000,000 in 2024. And plans to invest approximately $5,000,000 in '20 Although we recognize that it's achieving our safety objectives will be a journey, We have achieved some positive improvements Our OSHA total recordable injury rate decreased declined seven percent over the prior year Our corrective action completion rate related to potential serious injuries improved by fifteen percent compared to 2023. Additionally, we improved our employee engagement in safety with a thirty six percent 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 re 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 12, 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 the landscape for The U. S. Steel industry. These actions align with our long standing 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 Overall, aerospace and defense has been a bright spot for us in the 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% albeit 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 investment 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. Metallus 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 $20,000,000 in annual [indiscernible] 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 shipments to the automotive sector in 2025. On the topic of electric vehicles, it's widely known that many OEMs have backed off of their 2,030 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 $135,000,000 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 $4,000,000 purchase order for artillery shell canister tubing for the U. S. Army. Additionally, we are enthusiastic about in aerospace and defense and other sectors by leveraging vacuum arc [indiscernible] and vacuum induction melt steel combined with our unique downstream processing capability. With the support of trusted supply chain partners, we are targeting approximately $30,000,000 of revenue in 2025 using outside VAR and VIM products combined with our rolling and piercing capabilities Using this process path, supports our large defense customers who supply the U. S. Military's missile programs. Given the high level of demand for specialty metals including bar and BIM products, Metallis 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 $250,000,000 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 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, mix dependent. For the remaining 30% of the order book with markets spot pricing, we will continue to adjust pricing as demand evolves throughout the year. Our bar product lead times are currently at ten to twelve weeks depending on size and two product lead times are at ten 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, Matalas 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 market, while continuing to support our automotive, industrial and energy customers in a challenging demand environment.

And investing in our manufacturing facilities and process 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 twenty twenty four financial results. From a top line revenue perspective, 300 tons Mike previously covered the drivers of fourth quarter shipments by end market in his comments. The company reported a GAAP net loss of $21,400,000 in the fourth quarter were a loss of $0.5 per diluted share inclusive of a $9,400,000 loss on the repurchases of convertible notes and an $8,500,000 non cash mark to market pension remeasurement loss. On an adjusted basis, the company reported a net loss the fourth quarter of $3,300,000 or a loss of $0.08 per diluted share. Adjusted EBITDA was $8,300,000 in the fourth quarter a sequential increase of $2,200,000 primarily driven by higher shipments and favorable product mix partially offset by higher manufacturing costs. The sequential increase in manufacturing costs of $10,300,000 in the fourth quarter was a result of lower cost absorption as well as the recognition of costs previously capitalized into inventory. Metallus 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 $5,300,000 of required pension contributions resulting in total required contributions of approximately $43,000,000 in 2024. With the benefit of previous annuitization activities, the pension and retiree medical benefit liability has declined by approximately $150,000,000 since the end of twenty twenty three and declined by approximately $800,000,000 since the end of twenty twenty one. As of 12/31/2024, the underfunded position of the company's pension and retiree medical plans totaled $171,000,000 As a result of the current underfunded position, funding rules and year end actuarial assumptions the estimate for acquired pension contributions in 2025 is approximately six with a higher proportion of required contributions in the first quarter. Following this elevated level of required pension cash 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 $13,900,000 driven by lower levels of working capital. For the full year, the company generated operating cash flow of $40,300,000 Capital expenditures totaled $15,200,000 in the fourth quarter and $64,300,000 for the full year in line with previously stated guidance.

Approximately $8,000,000 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, automated grinding line construction and installation of the Harrison facility was a significant project in 2024 This $18,000,000 investment which is currently being commissioned will significantly improve the efficiency of our finishing capabilities and is expected to generate over $3,000,000 in savings per year. Additionally, new gaging 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 $8,000,000 of cash funding from the government's as part of the previously announced $99,750,000 funding agreement in support of the U. S. Army's mission of increasing munitions production. In total, during 2024, the company received $53,500,000 of the approximate $103,000,000 of total committed funding. Receipt of the remaining $50,000,000 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 Gambriina facility.

Once commissioned, these investments will support the company's targeted growth in aerospace and defense product sales as well as support all Metallis customers with more efficient and modern assets. From a total capital expenditure forecast perspective, we're targeting approximately $125,000,000 this year inclusive of approximately $90,000,000 of CapEx funded by the U. S. Government. We've included a slide in the latest investor presentation available on our Web Right. 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 demand that Mike previously highlighted. Switching gears to shareholder return activities. Throughout 2024, the company continues to make progress on its share repurchase program. In total, the company repurchased 2,000,000 shares of its common stock for $37,600,000 last year, reducing outstanding shares by nearly 5%. At the end of 2024, company had a balance of $102,800,000 remaining under its current share repurchase authorization. As it relates to convertible notes during the fourth quarter, repurchased $7,800,000 of outstanding convertible notes for total cash $17,200,000 The repurchase premium was driven by an increase in the company stock price which was significantly in excess of the instruments conversion price.

As a result of the fourth quarter convertible note repurchases, diluted shares outstanding will decrease by approximately 1,000,000 shares in the first quarter of twenty twenty five The outstanding principal balance of the remaining convertible notes is $5,500,000 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 twenty twenty two, combined with the convertible note repurchase activities, we've reduced diluted shares outstanding by a significant 22% compared to the fourth quarter of twenty twenty one. These actions reflect the strength of the company's balance sheet and confidence in through cycle cash flow generation. Switching gears now for an update on our targeted $80,000,000 of profitability improvements in support of achieving our long term through cycle financial targets that were announced in early twenty twenty two. 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, company has implemented the necessary manufacturing, commercial and process improvement actions to realize its $80,000,000 profitability improvement target Although it's difficult to see the impact of these actions in a weak demand environment like '24 these investments and process improvements position the company for profitability improvement in the future 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 material surcharge revenue per ton is expected to sequentially increase in the first quarter driven by a $50 per ton increase in the number one busheline 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 $5,000,000 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 $58,000,000 in 2025, SG and A expense is anticipated to be excluding IT transformation costs and amortization expense. Net 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 approximately $44,000,000 in 2025 adjusted for any share repurchases equity compensation activity, Regarding cash drivers, in addition to the approximately $65,000,000 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 inventory given the improving customer order book.

As a result, we expect the first quarter of twenty twenty five 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 $125,000,000 of CapEx is more heavily weighted to the second half of the year. Also, we expect to receive approximately $37,000,000 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 twenty twenty five, 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 the Metallus We would now like to open the call for questions. Thank you. We will now begin the question and answer session. We'll take our first question from John Franzreb at Sidoti and Company.

Good morning, everybody, and thanks for taking the questions.

I guess I'd like to start with 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 you saw in the fourth quarter versus maybe 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 I would very pleased to say that our order book is developing in a very healthy way. Situations that we haven't seen for February The development and the positive momentum in our order book is really being driven by a couple of factors. One is the I would call some recapture of of automotive business that we've achieved in 2025 a much greater order increase coming from the industrial base kind of spread heavily oriented to A and 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 And 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've 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 the trade environment expectation going forward as these tick tariffs get implemented on March 12.

So Mike, if I 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 secondary driver. Is that the way to kind of look at it from your point of view?

Yes, I would say the first part really is really the recapture of market share, particularly in automotive. [indiscernible] 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. [indiscernible] we're pretty pleased because we now have we have a pretty good order backlog. We have much longer visibility. Our lead times have almost doubled from where they were in the fourth quarter. So I think this is more of a normal environment that that we haven't experienced in 2024. [indiscernible] we're still with someone 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 normal every other week outage activity, maintenance outage activity. But no expected or planned downtime?

Got it. And you mentioned some of this at, I guess, Chris mentioned it is closing remarks about that $80,000,000 target. I guess [indiscernible] Chris phrased it, it sound like all the upgrades were finished and it's 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 incur in in 2025. So I'm curious, are those two items independent of each other or is all the necessary upgrades that you plan for the $80,000,000 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 require 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. [indiscernible] Okay.

One last question, and I'll get somebody else ask some questions. I'm kind of curious about the share repurchase and the $1,000,000 lower share count because I guess 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 44,000,000 shares was the number we should use for the full year.

So I just want to make sure I got that right. [indiscernible] 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 GAAP standpoint, but I think 44 on average on a weighted average basis is a good estimate for 2025.

Okay.

Thank you. So I'll get back into queue. Thank you, Mike.

Thank you. We'll move next to Dave Storms at Stonegate.

Good morning. Good morning. Just hoping we could start 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 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 and ramp up their production So we're optimistic that we're going to have a strong year in aerospace defense, but it's going to continue to grow throughout 'twenty five and into 'twenty six.

Understood. So then with with that expected increase in demand, and 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 for the industry?

Right now, it feels fairly normal. It's very hard for us to decipher whether people are over ordering for security reasons, and future demand. But again, I don't think we're back to the we're not totally back to the 'twenty one, 'twenty two, 'twenty three type demand from an order book and an order backlog standpoint. But we sure are on our way there. [indiscernible] 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 team is putting forth as well as the business development team in securing additional new product application in aerospace and defense. As well as we've gotten some gain recapture in energy as well. And that's all we're sixty days into the year. That's all at least 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 in the prepared remarks that you're targeting 40% of shipments. For auto in 2025.

Looks to me to be down a little bit year over year. Is that holds up Is that a product of weaker expected OEM market or maybe a stronger than expected [indiscernible] Industrial market?

Yes.

I mean, it's I mean, mean, when you have weak markets, automotive is pretty steady. So 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 as 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 2025 is stronger than 2024.

So part of that is the denominator in that calculation. By far, driving the percentage lower, but our participation is still being strong. We'll go next to Philip Gibbs at KeyBanc Capital Markets. Good morning.

Hey, Phil.

Question is just on the bridge in Q1. You talked about unfavorable price mix. Is that is that an absolute impact or per I guess a per ton impact or both It's really 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 carbon versus the specialty alloys. We expect as in the industrial base continues to improve and the A and D demand continues to increase. That will drive a richer mix for us on the alloy. Products versus the more the the vanilla carbon products?

That makes sense. I'm thinking about the the standard bridge that you all provide in your release in this quarter like price mix was positive, I can't remember, but maybe $5,000,000 or so.

And then you have the manufacturing and you have all those components. Is that pricemix expected when you make those comments, is that piece of it expected to be down relative to Q4? You obviously 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? [indiscernible] Okay.

That's helpful.

The pension contribution that you talked about Chris, the $65,000,000 a lot of that weighted in Q1.

Is there any does that include OPEB as well?

Can't remember.

No, it does not. OPEB typically leverages the assets is how we pay most of those. So there's a withdraw and you pay the contributions 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 Did you say that that was seamless mechanical tubing or seamless OCTG?

It's mechanical tubing.

Okay.

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

And then lastly, there was kind of certainly a soft patch in automotive in the back half, some of the the big three one in particular trying to take their inventory [indiscernible] pretty elevated inventories and maybe some reduction plans in the first half. 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 of quarters, but part of which is related to just inventory rebalancing and seems like to me that there all else equal should be some sort of pick up 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.

Yes. So we kind of right now our view is 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 how interest rates evolve, how people their 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 SAAR rate is going to go up slightly. Maybe a couple of hundred thousand units based on early assumptions of activity in February.

Thanks everyone.

Appreciate it.

Thanks, Bill. Thanks.

And that concludes our Q and A session. Will now turn the conference back over to Jennifer for closing remarks.

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