Financial Performance - Net sales for the three months ended September 30, 2024, were $227.2 million, a decrease of $127.0 million, or 35.9%, compared to the same period in 2023[67]. - Net sales for the nine months ended September 30, 2024, were $843.5 million, a decrease of $190.8 million, or 18.4%, compared to the same period in 2023[70]. - Gross profit for the three months ended September 30, 2024, decreased by $38.9 million, or 76.3%, compared to the same period in 2023[72]. - Gross profit for the nine months ended September 30, 2024, decreased by $58.3 million, or 40.2%, compared to the same period in 2023[74]. - For the three months ended September 30, 2024, total net sales were $227.2 million, with base sales of $182.0 million after deducting surcharges of $45.2 million[84]. - The company shipped a total of 119.9 thousand tons in Q3 2024, with net sales per ton averaging $1,895[84]. - In the nine months ended September 30, 2024, total net sales reached $843.5 million, with base sales of $669.3 million after deducting surcharges of $174.2 million[86]. Liquidity and Capital Expenditures - The company reported total liquidity of $496.8 million, including cash and cash equivalents of $254.6 million as of September 30, 2024[66]. - As of September 30, 2024, cash and cash equivalents totaled $30.3 million, down from $280.6 million on December 31, 2023[92]. - Total liquidity as of September 30, 2024, was $496.8 million, compared to $539.4 million on December 31, 2023[92]. - The company expects capital expenditures of approximately $65 million in 2024, including $15 million funded by the U.S. government[93]. - Capital investments for the three and nine months ended September 30, 2024, were $17.6 million and $49.1 million, respectively[65]. Share Repurchase and Debt - The company repurchased 1.2 million and 1.8 million common shares at an aggregate cost of $20.1 million and $34.1 million for the three and nine months ended September 30, 2024, respectively[66]. - The company repurchased approximately 1.2 million common shares for $20.1 million in Q3 2024, averaging $17.29 per share[97]. - For the nine months ended September 30, 2024, the company repurchased approximately 1.8 million common shares at an aggregate cost of $34.1 million, averaging $18.82 per share[98]. - The company has $106.3 million remaining on its authorized share repurchase program as of September 30, 2024[98]. - The company has $13.2 million of aggregate debt outstanding as of September 30, 2024, with no variable interest rates[110]. - As of September 30, 2024, the company has $13.2 million of aggregate debt outstanding, with none of it having variable interest rates, thus a rise in interest rates would not impact interest expense at this time[110]. Expenses and Tax Rate - SG&A expense for the three months ended September 30, 2024, increased by $2.0 million, or 9.8%, compared to the same period in 2023[75]. - SG&A expense for the nine months ended September 30, 2024, increased by $5.4 million, or 8.7%, compared to the same period in 2023[76]. - The effective tax rate for Q3 2024 was 16.9%, a decrease of 11.4% compared to 28.3% in Q3 2023, primarily due to lower income before income taxes[82]. Government Funding and Insurance Recoveries - The company received $35.5 million and $45.5 million from the U.S. government for the three and nine months ended September 30, 2024, as part of a $99 million funding agreement[66]. - The company recognized insurance recoveries of $31.3 million related to unplanned downtime at the Faircrest melt shop in 2022, with $9.8 million received in Q1 2023 and $1.5 million in Q2 2023[81]. Risk Factors - The company is exposed to commodity price fluctuations primarily related to purchases of raw materials and energy, including scrap steel and other metals, which could lead to significant volatility in prices and supply chain disruptions[112]. - The company manages commodity price risk through supplier pricing agreements and a raw material surcharge mechanism, which helps maintain gross margins during periods of stable demand[113]. - Current global conflicts could exacerbate inflationary pressures and lead to potential market disruptions, although the company has not been materially impacted to date[112]. - Currency fluctuations may impact earnings, particularly as sales are primarily made to customers in the United States, with potential effects on raw material prices in foreign markets[111]. Credit Facilities - The company entered into a Fourth Amended and Restated Credit Agreement, extending the maturity date of its credit facility from October 2024 to September 2027, maintaining a capacity of $400.0 million[88]. - The interest rate on borrowings under the credit facility is now based on a two-tiered schedule, with applicable rates decreasing by 25 basis points[88]. Cash Flow - Net cash provided by operating activities for the nine months ended September 30, 2024, was $26.4 million, a decrease from $51.2 million in the same period of 2023[101]. - The company continues to evaluate its liquidity needs and potential access to equity and debt capital markets for additional financing if necessary[94].
Metallus(MTUS) - 2024 Q3 - Quarterly Report