Q1 2022 Worthington Industries Inc Earnings Call
Businesses.
We had a strong start to our fiscal year reporting earnings of $57.0, a share in Q1 versus $33.0 in the prior year quarter, excluding restructuring and onetime items, we generated a record $48.0 per share in earnings in Q1 compared to 64.
In the prior year quarter.
During the quarter, we recognized a net after tax restructuring gain of $5 million or nine a share.
Mainly related to the sale of a shuttered facility owned by our <unk> joint venture.
That compares to restructuring and impairment charges of <unk> 16, a share a year ago.
In addition, the prior year results included a net benefit of $84.0 per share related to our investment in Nikola Corporation.
Consolidated net sales in the quarter of $2.0 billion were up significantly compared to $703 million in Q1 of last year.
The improvement was primarily due to higher steel prices combined with increased volumes across most of our segments.
Gross profit for the quarter increased to $219 million from $113 million a year ago.
And our gross margin increased to 19, 7% from 16, 1%.
Our adjusted EBITDA in Q1 was a record $196 million up from $75 million in Q1 of last year and our trailing 12 months adjusted EBITDA is now $604 million.
In steel processing net sales of $823 million nearly doubled from $431 million in Q1 of last year due to higher average selling prices and increased volumes total shipped tons were up 14% from last year's first quarter. When demand was just beginning to recover from COVID-19 related shutdowns, particularly at our automotive.
Customers.
Direct tons in Q1 were 49% of mix, which was consistent with the prior year quarter.
We continue to see solid demand across nearly all of our major end markets, including automotive construction heavy truck and agriculture.
Despite the solid demand and year over year growth automotive shipments could have been better if not.
Not for the continuing semiconductor related slowdowns.
Everything we see suggests that while consumer and fleet demand for new cars remained strong chip shortages will persist for the next several quarters and our automotive demand there'll be subject to some uncertainty as a result the.
The demand is clearly there we will likely just take some time for the semiconductor shortages to resolve itself.
Our teams continue to do a terrific job navigating unprecedented market conditions, while remaining laser focused on the needs of our customers.
In the current quarter steel generated adjusted EBIT of $108 million and adjusted EBIT margin of 13% compared to $14 million and 3% in Q1 of last year. The large year over year increase was primarily driven by increased demand higher spreads and arbitrage gains.
In the quarter, we had pre tax inventory holding gains estimated to be $47 million or <unk> 68 per share compared to holding losses of $7 million <unk> a share in Q1 of last year.
On current steel prices, we expect inventory holding gains again in Q2, but we will also continue to see the impact of the widening scrap gap.
Consumer products net sales in Q1 were $148 million up 10% at 10, 6% from the prior year quarter.
Let me see consumer products revenues were up slightly and the inclusion of sales from GTI, which was acquired in January drove the balance of the growth.
EBIT for the consumer business was $21 million and EBIT margin was 14% down from $24 million and 18% in the prior year quarter the.
The decrease in EBIT was due to higher labor and input costs, our consumer business has some longer fixed price contracts with customers, which can create a short term drag on margins when input rises when input prices rise as rapidly as they have.
These dynamics are typically short term and we do expect margins to improve moving forward.
Building products generated net sales of $115 million in Q1, which was up 30% from $88 million in the prior year quarter increase.
The increase was due primarily to higher volumes as the prior year quarter was impacted by Covid related disruptions.
Building products EBIT was 49 million and EBIT margin was 42% up significantly from $27.0 million and 27% in Q1 of last year.
We saw significant growth year over year in our wholly owned building products businesses, but the majority of the upside was driven by strong results at wave and Clark Dietrich.
Contributed $26 million and $17 million, respectively and equity earnings.
Wave and quite Dietrich, both had better demand environment than in Q1 of last year and all of our teams and building products are doing an excellent job managing dynamic supply chains and continuing to execute in challenging conditions.
Okay.
And sustainable energy solutions net sales in Q1 were $25 million down from $28 million in the prior year quarter.
Largest end market for this business is transportation and then semiconductor chip shortage created headwind for them with respect to demand.
In addition, the economy in Europe is recovering but very slowly.
The business reported a negative EBIT of $3 million in the current period as volumes were too low to absorb fixed cost.
Remain very excited about this business and its prospects over the long term as its innovative products and solutions are poised to go quickly serving the hydrogen ecosystem and adjacent sustainable energies like compressed natural gas.
With respect to cash flows and our balance sheet operations used cash of $50 million in the quarter, which was driven by $149 million increase in working capital primarily associated with higher steel prices, along with annual accrued compensation being paid out during the quarter.
Absent further increases in steel prices, we would expect a significant working capital increases to subside in the next quarter or two.
During the quarter, we received $20 million in dividends from our unconsolidated jv's.
We received $27 million in proceeds from asset sales completed one acquisition for $105 million invested $24 million in capital projects paid $15 million in dividends and spent $61 million to repurchase 1 million shares of our common stock.
Following the Q1 purchases, we have $11.0 million shares remaining under our share repurchase authorization.
Looking at our balance sheet, and our liquidity position funded debt at quarter end of $706 million was relatively flat sequentially and interest expense of $8 million was in line with the prior year quarter.
We ended Q1 with $399 million in cash and we continue to take a balanced approach to capital allocation.
Focused on growth and on returning capital to shareholders.
Earlier today, the board declared a <unk> 28 per share dividend for the quarter, which is payable in December 2021.
At this point I will turn it over to Andy.
Thank you Joe and good afternoon, everyone.
To start fiscal 'twenty, two with another record performance.
However, the operating environment remains quite challenging with the continued rise in steel prices supply chain issues in steel and other components and the continuing labor shortage.
Our people continue to showcase their commitment by going the extra mile to ensure that we are working safe and doing their best to meet our customers' needs.
Demand levels are good across almost all of our end markets and backlogs remain at elevated levels. We continue to raise prices in many of our product lines to offset rising input costs, particularly steel.
Higher working capital needs had a meaningful impact on free cash flow this quarter, but this will reverse if steel prices begin to decline as we expect in coming quarters.
This is the first quarter reporting our three new operating segments consumer products building products and sustainable energy solutions.
Hopefully you will find as we believe that each of these segments is an attractive business with unique advantages and compelling strategies to grow for years to come.
We will continue to leverage our transformation playbook, new product development, and innovation and M&A to drive above market growth and higher returns on capital.
While our innovation and M&A growth initiatives continue across the portfolio. The M&A environment is proving challenging with elevated purchase multiples and difficult earnings analysis due to the unpredictability of the Covid environment.
To the extent, we do find compelling targets, our balance sheet remains strong with significant cash and borrowing capacity.
Finally, we just published our second corporate citizenship and sustainability report since our obsessed inception, we have worked hard to be a good corporate citizen for all of our constituencies and in our communities as well as to minimize our environmental footprint.
While we are a relatively clean manufacturing operation overall in 2012, we started our successful Green Star initiative that aims to recognize our manufacturing facilities for environmental conservation and stewardship.
In fiscal 'twenty, 164% of our facilities achieved a four or five star performance rating.
We are working towards an even more robust approach to reducing our environmental footprint and expect to have more details in the future regarding our goals.
It is often difficult to follow a record year, but we are off to a fast start and our teams remain focused on continuing to deliver for our customers and creating value for our shareholders.
Thanks, again to all of our employees for their hard work and dedication to operating safely and effectively.
I'll now take any questions.
At this time I would like to inform everyone.
Like to ask a question. Please press Star then the number one on your telephone keypad.
For just a moment to compile the Q&A roster.
Your first question comes from the line of Martin Englert with Seaport Research partners.
Hi, good afternoon, everyone.
Good afternoon Mark.
Just wanted to come back and touch on inventory holding gains that were about $47 million within steel processing. So the quarter could you discuss maybe the magnitude or some goalposts on what you might anticipate for the current quarter.
Sure It's Joe Martin.
Think there'll be significant again, but not as high as they were in Q1.
Okay, and anything as far as the functional offset from the scrap them.
Yes, the scrap capex, historically run plus or minus $300 and it's four times that now or more and so <unk>.
Significant we do everything we can to offset that in terms of trying to buy and sell in different buckets, but.
We'll continue to see that it's we don't call it out with what we know it's there.
Okay. Thanks for that.
<unk>.
Shifting and looking at the automotive supply chain can you provide a little more detail regarding what you're seeing there today in the current market environment.
It's improving or deteriorating and maybe more specifically, what's your read on the downstream channel inventories there within autos can you give a sense that they are building inventories or do you think that theres still managing pretty tight terms.
I would say Martin this is Andy <unk>.
Supply chains are still.
Pretty backed up.
Got.
It's hit or Miss depending on the models that are being manufactured I'm sure you're tracking it and we're doing our best to stay on top of it but it changes kind of daily depending on the facility that we're shipping to and who the customers are.
<unk>, we don't track sort of.
Cars on lots, if thats, what youre, asking but my sense in my little World of Columbus, Ohio, and other places is that inventories dealer inventories are still very very light.
There is way more demand than there are available cars and.
It's likely to be that way for the foreseeable future assuming the demand the end market demand stays the same.
And Martin our automotive tons, our yield there are direct tons into automotive were actually up 14% year over year.
Including our PWB joint venture.
Which had a decrease there in the most impacted of our groups based on the platforms that they're on but.
Yes.
And as Andy said it.
I don't think it's getting worse, but it's not getting materially better yet either in terms of the supply chain generally.
Okay, how about.
You may now never read here, but more so the intermediate.
Tory the Oems or the staff firms.
Can you give us a sense of the cadence of steel that youre shipping and matching what the production is out there or do you think that they are building.
Inventory.
Pour it gets produced in <unk>, whether it be Neal sitting there or Sam pieces and parts or partially produced vehicles.
We clearly don't have a global view, there Martin, but I certainly don't think that there are warehouses upon warehouses full of coils, which deal at this point based on where things are.
Fair to say that it still seems like a lot of just in time inventories for the folks on the supply chain.
I mean traditionally how they've been and again, we don't we don't think that there are mountains of coils somewhere that people don't know about.
Okay. That's helpful. I appreciate that if I could just one quick last one on the blanking facility acquired.
Any goalposts as far as the volume contribution that we should expect there for steel processing.
Yes, so part of that's part of Shiloh, obviously and Thats one.
Facility. The other facilities went into the TWD joint venture.
It's not going to be Matt.
Massive in that regard, but we're real happy with the Shiloh as assets.
Were impacted during the quarter.
By the southern Dr Shutdowns com in a similar way that TWD was but so far so good there and we're excited about what that does they were they were profitable.
Pretty close to an adjusted plan, assuming the semiconductor shortages so.
Feel good about that one thus far.
Okay. Thanks, a lot nice job navigating the market there and congratulations on the results.
Thank you Sir.
Your next question comes from the line of Phil Gibbs.
With Keybanc capital markets.
Hey, thanks.
Good afternoon guys.
Hey, Phil.
So in terms of the.
The scrap gap I know Martin asked about it but.
Can you help us in terms of just some some level of magnitude in the first quarter or the way to wave.
The way to think about it why why in terms of it.
Impacts you.
I don't understand it I guess completely.
Sure, it's probably wont be a perfect explanation, but effectively.
We have scrapped in the processing that we do ranging from two years or 3%, whether it's the beginning of our coil or the end of our coil up to upwards of 12, 13, 14, and 15% and our cold roll business.
Were there just happens to be more and thats more of a stamping operation and so historically.
That scrap gap has averaged around $300 right. The delta between what we buy steel for and what we cannot ultimately sell the scrap for not a lot ends up being roughly 8% of the total across the steel.
Facilities, and then as that scrap gap widens on their part.
<unk> and charts you can you can plot.
On different services, but.
But we actually ultimately have an impact there and so we think it will be a greater impact on us in Q2 than it was in Q1.
But nothing that is going to kind of by itself create.
Giant issues for us I mean, I think it could be.
Based on the lag in steel prices it could be.
But ordinary order to order of magnitude bigger in Q2 than it was in Q1, but again, we can try and offset that with some things that we can do on the hedging side or going into different buckets and so.
It's there and we pay attention to it and we try and manage around it but it will create a headwind for us I can't really quantify for you because it depends on a lot of things, but that's directionally the way that it works.
Okay.
And then I.
I saw you made an acquisition in the quarter.
Can you can you kind of talk about what that may have contributed to the.
The bottom line.
In the quarter and maybe maybe strategic fit and then how it's how we should be thinking about it moving forward.
I assume youre talking about the Shiloh acquisition, yes, yes sure so.
Fantastic.
Laser welding and blanking operation.
Fit very well with our <unk> business anything having to do with light weighting anything having to do with all of those ongoing efforts within automotive.
Really kind of lend themselves towards businesses like that.
Of that business that was did.
Nice reasonable slug of EBITDA during the quarter.
It was impacted by the semi chip shortage pieces because its customers are similar to <unk> in that regard but.
Really happy that it takes us even further in the direction.
Around light weighting around hybrids around more of the future that we see in automotive and so so far so good there and we it was accretive in the quarter, we expect it will be accretive in the quarters to come.
Okay.
And then just on <unk>.
Just on the non <unk>.
The non process steel businesses I think you said consumer products you saw a little bit of a pinch relative to last year, you expect margins to normalize, but then you've got some businesses and probably building products that benefited from from the timing on the front end of getting pricing versus your raw materials. So.
Is there is there a kind of a two quarter.
Kind of a two quarter thought process prospectively, where you've got.
Margins creeping back up in the consumer products and then you've got margins probably normalizing at some point as the steel catches up to the selling price in the downstream businesses on the building products side.
Yes, I mean, it's a tough.
Question to just make a blanket statement on fill because each business is a little bit different.
And just as an example in our joint ventures wave inquired theatric most of their business is spot oriented they have the ability to raise price when they need to as long as the market.
Is receptive to that and it has been and then you contrast that with.
Some of our consumer products businesses, where we're selling to big box retailers and there is sort of brackets around when and how price increases are implemented and so there is a lag effect when when that occurs and that's really what we're talking about where.
Margins can be compressed on a short term basis, but will ultimately catch up.
That's usually a quarter, maybe two of lag it's not a substantial delay.
A delay, but it does take some time.
Okay, and then lastly, and I'll jump off just to remind us I.
I guess of your your liquidity position.
Cash available credit that sort of thing.
And then if you are I know youre typically acquisitive, what what may be.
Some things that you.
You'd be interested in a general sense. Thanks, so much.
Sure. So you ended the quarter with just under $400 million of cash $500 million on our revolver that is undrawn.
So feel pretty good about that we've in the last three quarters.
Phil just simple using simple working capital metrics, just inventories receivables and payables in the last three quarters, we've added $330 million to working capital.
So we feel like as steel prices moderate or in the eventuality that they decline and some of that cash will come back to us as well.
Really happy with our balanced approach to capital allocation still paying a dividend we bought back 1 million shares in Q1.
We're looking at M&A opportunities I mean, we've made three thus far in calendar 2021, we and we continue to look for attractive targets that meet our cash return on investment thresholds and are good strategic fits or additions for us.
So we're going to continue to pursue overly stressing the balance sheet certainly.
Thank you.
Thank you.
Your next question comes comes from the line of John Tumazos Tumazos very independent research.
Thank you for the great results.
No.
So it's incredible how much money you're making.
Last week, the wood company wire highs are having an investor day.
And they predict a 25% five year growth in lumber.
With the smog of it coming from them displacing steel and what they called tall buildings.
A couple of days ago, I was taking new Jersey coastline.
And I saw six story apartment building entirely wood framed up to the roof.
Okay.
Do you think.
The high steel prices are hurting.
CT Dietrich badly I know the earnings were a record.
Could be some substitution visible.
And are there other businesses, where you see your customers.
We're looking for some substitution.
Yes, John we explored that.
On the surface anyway.
In Idaho.
Expect I mean look there is a lot of dislocation right now in terms of price volatility with wood and with steel as you well know and historically, there's always been a little bit of substitution here or there.
But for the most part the markets are kind of pre established.
Were to stay at $2000.
And Woodward.
Continuing.
You are declining in the spread really increase maybe maybe that would change, but I don't know released.
I don't know who is building.
I would encourage them to understand.
We're much more difficult for wood to meet with wood than they are with steel framing. So there is a separate issue.
Two related to that but I understand the thought process I think.
A lot of it sort of depends on where this thing settles out pricewise.
Adding up the units of the three new segments.
To the old cylinders.
Segment.
The units were about 3 million more in the <unk>.
Volume category.
Do you include.
For Clark Dietrich units in construction.
Can we compare those total units to the old cylinder total units.
Yes, you can wave and Clark theatrics volumes are not in there and you do have.
The acquisitions that took place.
Specifically.
The <unk> acquisition and then.
Of that increase.
John.
Although.
Although volumes were up across the board.
The legacy business as well with the exception of sustainable energy solutions, which we talked about earlier.
Are the revenues of wave and Clark T tricks there.
Or just the incomes.
Just the equity income and the reported numbers.
In terms of the sustainable energy loss in the $600000 loss in the.
Other parts of the equity affiliates.
Could you sort of explain that.
Are there margin squeezes from inputs that could go away.
So those are little details, but every penny.
And he adds up.
Sure, so specifically to sustainable energy solutions.
But of course, the time will be prompt.
Audible.
And.
So.
Some pretty specific things hitting them in this quarter Q1, just because it's Europe.
July and August and it's kind of the vacation slower season, but on top of that the largest market.
Expectation automotive and semiconductor shortage hitting a couple of its very large customers.
Just some some headwinds there, but ultimately we think that resolves itself and that business will be.
He will be profitable and ultimately has.
A lot of runway relative to the next several years in terms of hydrogen in the altra.
Turning to fuels economies on the other line John those are really just some odds and ends nothing really dire that's the law.
Yossi engineered cabs business the pieces that are better left so.
Nothing nothing that we would point to as being.
Real material there.
<unk> products, sorry, the simple way.
Still learning the new segments.
Sure So certainly.
Get you to bounce onto the website or will make mobile if you will.
Things like hydrogen.
And CMG.
In others <unk> company that we acquired.
In January.
They actually have a lot of the sensors and valves and.
Future mints that enable.
Transportation vehicles actually the CMG or hydrogen.
Market using our fuel.
Tools other than traditional diesel fuels.
Very much.
Thank you John.
Once again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
Okay.
Your next question comes from the line of Martin Englert with Seaport Research partners.
Hi, Thanks for taking my follow up.
Substitution between lumber and steel for adults.
Hello framing on construction.
Labour aspects to it.
Some of the metal framing and pursuing that path was a bit more labor intensive and offered some efficiency gains on that front and just thinking about that dynamic and kind of rising wages and the labor market as well.
I am sorry, Martin are you, saying metals.
Or less efficient.
It is more labor efficient versus the lumber is that a true statement.
That's true generally speaking.
There's other things.
We can do and construction companies do as well as de Wille prefab.
Pre fabricate some of that stuff, which they also do and would by the way but.
With respect to the labor.
You're focused on.
Developing whether its message.
Or products that require.
Yes onsite cutting.
They've both been quite effective at doing that and in fact, some of the acquisitions <unk> made a few smaller acquisitions.
That are adding products.
Accessories that kind of accelerate that effort.
The labor shortage is real everybody is facing right now, but the construction industry frankly, it's been pacing it.
Even longer than sort of the COVID-19 impact so they don't think thats going anywhere.
Trends toward building efficiency are very important ones. So we do think that's an important aspect of of what theyre trying to accomplish.
A lot of that is purchased on the second.
Dairy market.
So well see the same inflation.
Versus.
It would see inflation alongside the other flat rolled products, but it's typically always kind of bump.
I would tell you that.
Historically, meaning.
A number of years ago that used to be the case today, they still do buy secondary deal as well so it's not quite as <unk>.
Prevalent as it used to be in.
You were instrumental in driving that was.
The code regulations and enforcement of those code regulations, because while you can use.
Is.
Secondary steel for some of those applications Youre. The code requires that you don't for a number of others. So so it's still relevant but its not its not like 80% of their scale is secondary steel if that makes sense. Okay.
Yes, no thats helpful to understand that shift and then are you sourcing typically the substrate for that <unk> been playing in the import market at all and taking advantage of the arbitrage.
Okay.
Yes, both of those companies both of those joint ventures do import.
Some of their steel and Theres really two reasons, one is price arbitrage, but the other is light gauge.
Steel here in the U S. There just isn't a large supply of it and so from a strategic standpoint.
Turning to the sources, but.
<unk>.
Some of the tariffs and other things the percentage of imported steel has declined but both of them still.
Still buy in those markets.
Okay.
Did you ever have any appetite for other downstream fabrication.
I understand it's part of JV now, but thinking about other products that have done well in recent history with.
Data center build outs and warehouse and kind of the joist and decking arena and that sort of thing.
In terms of <unk>.
Products or markets.
Yes, anything you ever consider participating more farther on the downstream.
And while we certainly look at a number of downstream manufacturing operations. Many of them are metals based they don't have to be necessarily.
We have a pretty strict criteria that involves.
Trying to raise our margins and our as Joe said, our cash return on investment so it's.
It just depends on how attractive the businesses, we've been in around and around some of those in the past you may recall, we had a we.
We had a.
Cold form steel building company, where we actually built mid rise buildings for a while and.
No.
It just wasn't a great market for us that didn't prove out the way we had hoped and so it wasn't a fit but we continue to look at things like that.
But I will tell you part of our focus also around.
M&A I think Phil asked the question earlier, what's attractive.
Sure.
We're looking at a lot of different.
M&A opportunities and part of the segmentation of the former pressure cylinders segment is to help us focus where.
Where we want to go there the consumer products business, we feel like has a tremendous amount of opportunity to continue to leverage the brands in the markets that theyre in and enhance our relationships with our customers.
The challenge right now is just a lot of those businesses are extremely expensive their earnings have exploded with COVID-19 and so it just makes it a tough market.
Define the business and get it priced the way, we would like to buy it so.
Anyway.
It's an interesting market for sure I think we had.
A person.
I'd say, it's somewhat of an M&A frenzy.
Going on out there right now and so we just have to be careful.
Is that a dynamic where.
People that our sellers are trying to get.
In a more normalized through cycle multiple or something more akin to that.
The peak ish type earnings and you're not really having conversations where sellers are willing to be.
The sales multiple more on a go forward.
Michael <unk>.
EBITDA opportunity.
Yes, I mean, everybody wants to pay off whatever the highest number sell off whatever the highest number is right and.
I certainly wouldn't want to do that too if I were selling a business, but what we are having a hard time doing it.
Is filtering.
How much of that is sustainable versus how much of that is.
Because there was a temporary change in behavior over the last two or two and a half years.
And.
We don't we it's hard enough to make money and build your capital base and were trying to be.
Conservative and make sure that we when we do spend dollars on M&A that we feel confident that that EBITDA is sustainable.
No I think thats good.
Good prudent approach so I'm sure that your Investor base Depreciates.
One last one here I am just curious on your thoughts on flat rolled steel prices.
Looking ahead over the next.
Medium five to 10 years versus where.
Hot rolled coil prices have been apps through cycle do you think there is a structural change in the U S North America and <unk> global market when you have a <unk>.
Different through cycle flat rolled steel price.
But one of my favorite learnings I'm, not I'm not that old, but I have been through three sort of major business cycles in my career and when somebody says Oh, it's different this time, that's usually when I get skeptical.
There are some fundamental changes going on in the steel market right now with the mills.
Capacity has been taken out with some of the older.
<unk> integrated mills and there is continued evolution into the mini mill market and expanded capacity there.
It's hard to say really I mean, you also have the tariff impact that has sort of restricted imports into the U S. But I don't think fundamentally anything has changed with respect to the fact that there is.
There is too much capacity globally in steel production and so for us.
<unk> sort of forget.
For Worthington industries, generally we want low stable steel prices and so we obviously make a lot of money when steel runs up and it's great.
Certainly enjoy it but at the end of the day for all of our businesses, it's better to have those low stable steel prices.
We're at all time highs right now in this country and.
Sure.
I don't know when it's going to go down, but I would certainly.
Youre willing to predict that at some point.
In the not too distant future, we're going to start to see some downward pressure.
The only thing I'd add is look we look at the forward curve right, we're not steel prices.
<unk>, but if you look at the forward curve and you look at how it's evolved over the last year.
I think I saw in one of the sell side publications, an estimate for 2023 year and hot rolled of over $900 a ton.
And Thats, the very first time that I've ever seen something that's two years out.
That high and so.
Again, we think our teams are world class and we'll do we'll do better than most in any steel environment, but.
There definitely has been a shift in how people spend their time and spend their money over the last couple of years.
It is hard for people to remember that not much more than a year ago steel is under $500 a ton for hot roll.
Yes.
Yes.
<unk> had quite a run so far.
Look I think you're one of the biggest purchasers of flat rolled hot rolled coil.
North American market.
Imagine you're not really having too much trouble getting into mill order books, but maybe if you could just touch on the dynamic there.
Broadly the availability of Nikola lead times are looking.
Yes.
It's still a challenging market to some degree on supply most of the mills are pretty full.
And supply chains are obviously complicated right now for us.
We do have great relationships with our mill partners and the reason we have great relationships as we're a good customer where our loyal customer, but also sometimes the mills need help with filling up order books and other things and we try and work with them to be helpful. When they need help as well so I think times like these.
When we do need to call on a partner for steel supply I think we we have people that are willing to listen and that does help us out in the marketplace and enable us to service our customers, but I think that is.
As a part of our philosophy and who we are as Worthington, we treat others. The way, we would like to be treated and I think that pays off in times like these.
Okay excellent I appreciate all the color there very helpful and again congratulations on the results.
Thank you.
At this time there are no further questions I would like to turn the call back over to Worthington industries for closing remarks.
Thanks, everyone for joining us today I hope everyone continues to stay safe and we look forward to seeing you hopefully at our upcoming virtual Investor day, which is going to happen later this fall.
Everyone have a great day.
This concludes today's conference you may now disconnect.
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