TimkenSteel(TMST) - 2025 Q1 - Quarterly Results

Metallus First-Quarter 2025 Results Financial Highlights Metallus reported Q1 2025 net sales of $280.5 million and net income of $1.3 million, improving sequentially from Q4 2024 but declining from Q1 2024 Q1 2025 Key Financial Metrics Comparison | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Sales | $280.5M | $240.5M | $321.6M | | Net Income (Loss) | $1.3M | ($21.4M) | $24.0M | | Diluted EPS (Loss) | $0.03 | ($0.50) | $0.52 | | Adjusted Net Income (Loss) | $3.2M | ($3.3M) | $26.1M | | Adjusted Diluted EPS (Loss) | $0.07 | ($0.08) | $0.56 | | Adjusted EBITDA | $17.7M | $8.3M | $43.4M | Management Commentary Management highlighted increased order backlog, supported steel tariffs, and confirmed strategic investments and share repurchases - The company's order backlog has increased by approximately 50% compared to the same period last year, driven by new and existing customers[5] - Management supports the enforcement and expansion of steel tariffs, believing they will help meet growing demand for domestically produced steel[5] - Capital allocation strategy prioritizes strategic investments for profitable growth, such as expanding capacity for U.S. Army munitions production, alongside the ongoing share repurchase program[6] First-Quarter 2025 Financial Summary Q1 2025 net sales increased sequentially, driven by higher shipments and improved melt utilization, reducing manufacturing costs - Net sales increased 17% sequentially from Q4 2024, primarily due to higher shipments and increased raw material surcharge revenue, but decreased 13% compared to Q1 2024[7] - Shipments increased by 17% sequentially to 152,900 tons, driven by higher demand from industrial, automotive, and energy markets[15] - Melt utilization improved to 65% in Q1 2025 from 56% in Q4 2024, leading to a $12.5 million sequential decrease in manufacturing costs, though still below Q1 2024's 72% utilization rate[15] Cash, Liquidity, and Repurchase Activity The company ended Q1 2025 with $180.3 million cash and $432.0 million liquidity, with operating cash outflow driven by a pension contribution Q1 2025 Cash and Liquidity Overview | Metric | Value (in millions) | | :--- | :--- | | Cash and Cash Equivalents (End of Q1) | $180.3 | | Total Liquidity (End of Q1) | $432.0 | | Operating Cash Flow | ($38.9) | | Capital Expenditures | $27.5 | | Share Repurchases | $5.6 | - Received $11.9 million from the U.S. Army and $1.0 million from JobsOhio during the quarter as part of larger funding agreements for capacity expansion[12] - The company repurchased approximately 395,000 common shares for $5.6 million, with $97.2 million remaining under the authorized repurchase program[11] - The remaining $5.5 million of outstanding convertible notes are expected to be settled in cash during the second quarter of 2025[13] Business Outlook Metallus anticipates higher Q2 2025 adjusted EBITDA, driven by increased shipments and improved manufacturing cost absorption - The company expects second-quarter 2025 adjusted EBITDA to be higher than the first quarter of 2025[14] - Q2 shipments are expected to increase modestly, driven by higher aerospace & defense shipments, with lead times for bar and tube products extending to July[14] - The average melt utilization rate is expected to increase in Q2, leading to improved manufacturing cost absorption[18] - Full-year 2025 planned capital expenditures remain at approximately $125 million, with about $90 million funded by the U.S. government[18] Financial Statements and Reconciliations Consolidated Statements of Operations Metallus reported Q1 2025 net sales of $280.5 million and net income of $1.3 million, significantly lower than Q1 2024's $24.0 million Consolidated Statements of Operations (Unaudited) | (in millions, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net sales | $280.5 | $321.6 | | Cost of products sold | $258.6 | $271.0 | | Gross Profit | $21.9 | $50.6 | | SG&A expenses | $24.3 | $24.1 | | Income Before Income Taxes | $2.9 | $30.0 | | Net Income | $1.3 | $24.0 | | Basic earnings per share | $0.03 | $0.55 | | Diluted earnings per share | $0.03 | $0.52 | Consolidated Balance Sheets As of March 31, 2025, Metallus reported total assets of $1,101.5 million and cash of $180.3 million, slightly down from year-end 2024 Consolidated Balance Sheets (Unaudited) | (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $568.4 | $587.3 | | Property, plant and equipment, net | $510.7 | $507.3 | | Total Assets | $1,101.5 | $1,116.7 | | Total Current Liabilities | $280.1 | $281.5 | | Total Liabilities | $415.4 | $426.2 | | Total Shareholders' Equity | $686.1 | $690.5 | | Total Liabilities and Shareholders' Equity | $1,101.5 | $1,116.7 | Consolidated Statements of Cash Flows The company experienced a net cash outflow of $60.0 million in Q1 2025, primarily from operating activities due to a pension contribution Consolidated Statements of Cash Flows (Unaudited) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Provided (Used) by Operating Activities | ($38.9) | $33.4 | | Net Cash Provided (Used) by Investing Activities | ($12.9) | ($17.4) | | Net Cash Provided (Used) by Financing Activities | ($8.2) | ($18.7) | | Increase (Decrease) in Cash | ($60.0) | ($2.7) | | Cash at beginning of period | $241.9 | $281.3 | | Cash at End of Period | $181.9 | $278.6 | Non-GAAP Reconciliations This section reconciles GAAP to non-GAAP measures like Adjusted EBITDA and Free Cash Flow for clearer operational insights Reconciliation of Free Cash Flow Reconciliation of Free Cash Flow | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Provided (Used) by Operating Activities | ($38.9) | $33.4 | | Less: Capital expenditures | ($13.6) | ($17.4) | | Free Cash Flow | ($52.5) | $16.0 | Reconciliation of Adjusted Net Income and EPS Reconciliation of Adjusted Net Income (Loss) | (in millions, except per share) | Q1 2025 | Q1 2024 | Q4 2024 | | :--- | :--- | :--- | :--- | | As reported Net Income (Loss) | $1.3 | $24.0 | ($21.4) | | Adjustments (net) | $1.9 | $2.1 | $18.1 | | As adjusted Net Income (Loss) | $3.2 | $26.1 | ($3.3) | | As reported Diluted EPS (Loss) | $0.03 | $0.52 | ($0.50) | | As adjusted Diluted EPS (Loss) | $0.07 | $0.56 | ($0.08) | Reconciliation of EBITDA and Adjusted EBITDA Reconciliation of Adjusted EBITDA | (in millions) | Q1 2025 | Q1 2024 | Q4 2024 | | :--- | :--- | :--- | :--- | | Net income (loss) | $1.3 | $24.0 | ($21.4) | | EBITDA | $15.4 | $40.6 | ($12.1) | | EBITDA Margin | 5.5% | 12.6% | (5.0%) | | Adjustments | $2.3 | $2.8 | $20.4 | | Adjusted EBITDA | $17.7 | $43.4 | $8.3 | | Adjusted EBITDA Margin | 6.3% | 13.5% | 3.5% | Reconciliation of Base Sales by End Market Q1 2025 Sales Breakdown by End Market | (in millions, except tons) | Industrial | Automotive | Aerospace & Defense | Energy | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Ship Tons (thousands) | 66.3 | 64.1 | 8.6 | 13.9 | 152.9 | | Net Sales | $101.7 | $113.2 | $32.5 | $28.7 | $280.5 | | Base Sales | $75.1 | $91.6 | $29.1 | $22.0 | $222.2 | Calculation of Total Liquidity Calculation of Total Liquidity | (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $180.3 | $240.7 | | Availability not borrowed | $251.7 | $217.9 | | Total Liquidity | $432.0 | $458.6 | Adjusted EBITDA Walk Adjusted EBITDA Walk (in millions) | Driver | Q1 2024 vs. Q1 2025 | Q4 2024 vs. Q1 2025 | | :--- | :--- | :--- | | Beginning Adjusted EBITDA | $43.4 | $8.3 | | Volume | ($1.4) | $11.3 | | Price/Mix | ($28.6) | ($14.9) | | Raw Material Spread | — | $3.9 | | Manufacturing | $2.8 | $12.5 | | SG&A | $0.4 | ($4.3) | | Other | $1.1 | $0.9 | | Ending Adjusted EBITDA | $17.7 | $17.7 |