Metallus(MTUS) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Metallus's Q2 2025 performance shows improved profitability and cash flow, driven by strong execution and market gains Second-Quarter 2025 Performance Overview Metallus reported Q2 2025 net sales of $304.6 million and adjusted EBITDA of $26.5 million, reflecting significant sequential and year-over-year profitability improvements Q2 2025 Financial Performance | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----------------------- | :-------- | :-------- | :-------- | | Net Sales | $304.6 million | $280.5 million | $294.7 million | | Net Income (GAAP) | $3.7 million | $1.3 million | $4.6 million | | Diluted EPS (GAAP) | $0.09 | $0.03 | $0.10 | | Adjusted Net Income | $8.4 million | $3.2 million | $6.7 million | | Adjusted Diluted EPS | $0.20 | $0.07 | $0.15 | | Adjusted EBITDA | $26.5 million | $17.7 million | $19.9 million | - Q2 2025 net sales increased 9% sequentially from Q1 2025 and 3% year-over-year from Q2 2024[6] CEO Commentary CEO Mike Williams highlighted solid Q2 results driven by improved profitability, operating cash flow, strengthening end markets, market share gains, and operational execution - Solid Q2 results with significant improvement in profitability and operating cash flow, supported by improving end markets, continued market share gains, and strong execution[5] - Safety and operational excellence remain top priorities, with benefits seen from ongoing process improvements, including an increase in melt utilization[5] - Demand for domestic steel remains strong, and the company is on track with new asset installations to expand capabilities and support the Army's mission to increase munitions production[5] - Anticipates short-term cost impacts in the second half of the year from labor contract negotiations and annual shutdown maintenance, but remains confident in strategic direction for sustained profitability and cash flow[5] Second-Quarter 2025 Financial Summary Q2 2025 net sales reached $304.6 million, operating cash flow was $34.8 million, and total liquidity stood at $437.0 million Q2 2025 Key Financial Highlights | Metric | Value | | :-------------------------------- | :-------- | | Net Sales | $304.6 million | | Net Income | $3.7 million | | Adjusted EBITDA | $26.5 million | | Operating Cash Flow | $34.8 million | | Ending Cash & Cash Equivalents | $190.8 million | | Capital Expenditures | $17.8 million | | Common Shares Repurchased | $3.3 million | | Total Liquidity (as of June 30, 2025) | $437.0 million | - Net sales of $304.6 million increased 9% compared with Q1 2025 ($280.5 million) and 3% compared with Q2 2024 ($294.7 million), driven by higher shipments and increased raw material surcharge revenue per ton[6] Financial Position & Outlook This section details Metallus's cash, liquidity, capital allocation, and future commercial and operational expectations Cash, Liquidity and Repurchase Activity Metallus reported $190.8 million in cash and $437.0 million in total liquidity, with $34.8 million operating cash flow and $3.3 million in share repurchases Cash, Liquidity, and Capital Allocation (Q2 2025) | Metric | Value (as of June 30, 2025) | | :-------------------------------- | :-------------------------- | | Cash and Cash Equivalents | $190.8 million | | Operating Cash Flow (Q2) | $34.8 million | | Capital Expenditures (Q2) | $17.8 million | | - U.S. Government Funded Projects | $15.3 million | | Common Shares Repurchased (Q2) | $3.3 million | | Remaining Share Repurchase Auth. | $93.9 million | | Convertible Notes Settled (Q2) | $5.5 million | | Total Liquidity | $437.0 million | | Government Funding Received (Q2) | $5.1 million | | Total Government Funding to Date | $71.5 million | - Operating cash flow of $34.8 million in Q2 was primarily driven by profitability and the receipt of an income tax refund[9] - The company settled the remaining $5.5 million aggregate principal amount of its outstanding convertible notes, resulting in no outstanding borrowings as of June 30, 2025[11] Outlook Metallus anticipates a modest sequential decline in Q3 adjusted EBITDA due to expected costs from labor agreement negotiations and planned annual shutdown maintenance - Third-quarter adjusted EBITDA is expected to be modestly lower than the second quarter[13] - Profitability in Q3 is expected to be negatively impacted by costs associated with labor agreement negotiations, higher electricity costs, and planned annual shutdown maintenance costs[13] Commercial Outlook Q2 2025 ship tons increased 10% sequentially to 167,700 tons, with melt utilization improving to 71%, and Q3 shipments expected to be similar Ship Tons Performance | Metric | Q2 2025 | Sequential Change (vs. Q1 2025) | YoY Change (vs. Q2 2024) | | :---------------- | :-------- | :------------------------------ | :----------------------- | | Ship Tons | 167,700 tons | +14,800 tons (+10%) | +12% | | Melt Utilization | 71% | Up from 65% | Up from 53% | - Q2 2025 ship tons increased 10% sequentially, driven by higher shipments in aerospace & defense, automotive, and energy end markets[14] - Third-quarter shipments are expected to be similar to the second quarter, and base price per ton is anticipated to remain relatively steady[15] Operations Outlook The company projects increased melt utilization in Q3, with $15 million in annual shutdown maintenance planned for H2 2025 and $125 million in full-year capital expenditures - The company expects an increase in the average melt utilization rate in the third quarter from 71 percent in the second quarter[16] - Annual shutdown maintenance is planned for the second half of 2025 at a cost of approximately $15 million, with approximately $5 million expected in the third quarter[16] - Planned capital expenditures are approximately $125 million for the full year of 2025, consistent with previous guidance and inclusive of approximately $90 million of capital expenditures funded by the U.S. government[16] - Required pension contributions are expected to decline to approximately $3.5 million in the second half of 2025 compared with a previous estimate of approximately $10 million[16] Other Matters & Strategic Initiatives Metallus received an additional $10.0 million in government funding and will begin labor agreement negotiations with anticipated incremental costs in H2 2025 - In July, the company received an additional $10.0 million in government funding related to the capacity expansion funding agreement[16] - Negotiations with the United Steelworkers regarding the current labor agreement will begin on August 18, 2025, with an anticipated $3 million to $5 million of incremental cost in the second half of 2025 associated with these negotiations[16] Company Information & Disclosures This section provides corporate information, webcast details, non-GAAP financial measure definitions, and forward-looking statements Webcast Information Metallus will host a live Internet webcast of its conference call on Friday, August 8, 2025, at 9:00 a.m. ET, accessible at investors.metallus.com - Metallus will provide live Internet listening access to its conference call with the financial community on Friday, August 8, 2025, at 9:00 a.m. ET, broadcast at investors.metallus.com[17] About Metallus Inc. Metallus (NYSE: MTUS) is a leader in high-performance specialty metals, manufacturing alloy steel products from recycled scrap metal, serving diverse industrial markets - Metallus (NYSE: MTUS) manufactures high-performance specialty metals from recycled scrap metal in Canton, OH[18] - The company serves demanding applications in industrial, automotive, aerospace & defense, and energy end-markets[18] - Metallus employs approximately 1,850 people and had sales of $1.1 billion in 2024[18] Non-GAAP Financial Measures Metallus supplements GAAP results with non-GAAP measures like adjusted EPS and EBITDA, used by management for performance assessment and investor comparability - Metallus reports financial results in accordance with GAAP and corresponding metrics as non-GAAP financial measures, including adjusted earnings (loss) per share, adjusted net income (loss), EBITDA, adjusted EBITDA, free cash flow, and base sales[19] - Management believes these non-GAAP measures are useful to investors as they are representative of the company's performance and provide improved comparability of results, but should be viewed as additions to, not alternatives for, GAAP results[19] Forward-Looking Statements This section contains forward-looking statements subject to various risks and uncertainties, including demand fluctuations, operating costs, and global economic conditions - The news release includes "forward-looking" statements, identifiable by specific words, which are subject to material uncertainties that may affect actual results[20][23] - Factors that could cause actual results to differ materially include fluctuations in customer demand, changes in operating costs, success of operating plans, pension obligations, competitive factors, global economic conditions, and risks related to U.S. Army funding agreements[20][21] - The company undertakes no obligation to publicly update or revise any forward-looking statement, except as required by federal securities laws[23] Consolidated Financial Statements This section presents Metallus's consolidated statements of operations, balance sheets, and cash flows for the reported periods Consolidated Statements of Operations For Q2 2025, net sales were $304.6 million and net income was $3.7 million, while six-month net income significantly decreased to $5.0 million from $28.6 million in the prior year Consolidated Statements of Operations (Three Months Ended June 30) | (in millions, except per share data) | 2025 | 2024 | | :----------------------------------- | :------ | :------ | | Net sales | $304.6 | $294.7 | | Gross Profit | $32.2 | $24.1 | | Income (Loss) Before Income Taxes | $8.6 | $6.1 | | Net Income (Loss) | $3.7 | $4.6 | | Diluted earnings (loss) per share | $0.09 | $0.10 | Consolidated Statements of Operations (Six Months Ended June 30) | (in millions, except per share data) | 2025 | 2024 | | :----------------------------------- | :------ | :------ | | Net sales | $585.1 | $616.3 | | Gross Profit | $54.1 | $74.7 | | Income (Loss) Before Income Taxes | $11.5 | $36.1 | | Net Income (Loss) | $5.0 | $28.6 | | Diluted earnings (loss) per share | $0.11 | $0.62 | - Net income for the six months ended June 30, 2025, significantly decreased to $5.0 million from $28.6 million in the prior year, primarily due to a $3.6 million loss on extinguishment of debt in 2025[25] Consolidated Balance Sheets As of June 30, 2025, total assets were $1,112.0 million, with cash at $190.8 million, and total liabilities decreased to $422.0 million due to settled convertible notes Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | (Dollars in millions) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | ASSETS | | | | Cash and cash equivalents | $190.8 | $240.7 | | Total Current Assets | $560.5 | $587.3 | | Total Assets | $1,112.0 | $1,116.7 | | LIABILITIES | | | | Accounts payable | $143.7 | $119.2 | | Current convertible notes, net | — | $5.4 | | Total Current Liabilities | $276.2 | $281.5 | | Total Liabilities | $422.0 | $426.2 | | SHAREHOLDERS' EQUITY | | | | Total Shareholders' Equity | $690.0 | $690.5 | - Cash and cash equivalents decreased by $49.9 million from December 31, 2024, to June 30, 2025[28] - Current convertible notes, net, were reduced to zero as of June 30, 2025, from $5.4 million at December 31, 2024[28] Consolidated Statements of Cash Flows Q2 2025 net cash from operating activities was $34.8 million, a significant increase from Q2 2024, while the six-month period saw a net use of $4.1 million Net Cash Provided (Used) by Operating Activities (Three Months Ended June 30) | (Dollars in millions) | 2025 | 2024 | | :-------------------- | :------ | :------ | | Net income (loss) | $3.7 | $4.6 | | Net Cash Provided (Used) by Operating Activities | $34.8 | $8.3 | | Net Cash Provided (Used) by Investing Activities | $(12.7) | $(4.1) | | Net Cash Provided (Used) by Financing Activities | $(12.4) | $(9.4) | Net Cash Provided (Used) by Operating Activities (Six Months Ended June 30) | (Dollars in millions) | 2025 | 2024 | | :-------------------- | :------ | :------ | | Net income (loss) | $5.0 | $28.6 | | Net Cash Provided (Used) by Operating Activities | $(4.1) | $41.7 | | Net Cash Provided (Used) by Investing Activities | $(25.6) | $(21.5) | | Net Cash Provided (Used) by Financing Activities | $(20.6) | $(28.1) | - Net cash provided by operating activities significantly increased to $34.8 million in Q2 2025 from $8.3 million in Q2 2024, but for the six-month period, it shifted to a net use of $4.1 million in 2025 from a net provide of $41.7 million in 2024[29] Non-GAAP Reconciliations & Supplemental Data This section provides reconciliations for non-GAAP financial measures including free cash flow, adjusted net income, EBITDA, base sales, and liquidity Reconciliation of Free Cash Flow Q2 2025 Free Cash Flow was $32.3 million, a substantial improvement from Q2 2024, while the six-month period showed a negative free cash flow of $20.2 million Free Cash Flow Reconciliation (Three Months Ended June 30) | (Dollars in millions) | 2025 | 2024 | | :-------------------- | :------ | :------ | | Net Cash Provided (Used) by Operating Activities | $34.8 | $8.3 | | Less: Capital expenditures (excluding government-funded) | $(2.5) | $(14.1) | | Free Cash Flow | $32.3 | $(5.8) | Free Cash Flow Reconciliation (Six Months Ended June 30) | (Dollars in millions) | 2025 | 2024 | | :-------------------- | :------ | :------ | | Net Cash Provided (Used) by Operating Activities | $(4.1) | $41.7 | | Less: Capital expenditures (excluding government-funded) | $(16.1) | $(31.5) | | Free Cash Flow | $(20.2) | $10.2 | - Capital spending for U.S. government-funded projects ($15.3 million in Q2 2025 and $29.2 million in 6M 2025) is excluded from Free Cash Flow calculation[31] Reconciliation of Adjusted Net Income and Diluted EPS (Quarterly) Q2 2025 adjusted net income was $8.4 million ($0.20 diluted EPS), an increase from prior periods, with key adjustments including loss on debt extinguishment Adjusted Net Income and Diluted EPS (Three Months Ended) | (Dollars in millions) | June 30, 2025 | June 30, 2024 | March 31, 2025 | | :-------------------- | :------------ | :------------ | :------------- | | Net income (loss) (As reported) | $3.7 | $4.6 | $1.3 | | Adjustments: | | | | | Loss on extinguishment of debt | $3.6 | — | — | | IT transformation costs | $1.0 | $1.2 | $0.9 | | As adjusted (Net income) | $8.4 | $6.7 | $3.2 | | As adjusted (Diluted EPS) | $0.20 | $0.15 | $0.07 | - Adjusted net income for Q2 2025 increased to $8.4 million from $3.2 million in Q1 2025 and $6.7 million in Q2 2024[35] - Key adjustments in Q2 2025 included a $3.6 million loss on extinguishment of debt and $1.0 million in IT transformation costs[35] Reconciliation of Adjusted Net Income and Diluted EPS (Six Months) For the six months ended June 30, 2025, adjusted net income was $11.6 million ($0.27 diluted EPS), a decrease from $32.8 million in the prior year period Adjusted Net Income and Diluted EPS (Six Months Ended June 30) | (Dollars in millions) | 2025 | 2024 | | :-------------------- | :------ | :------ | | Net income (loss) (As reported) | $5.0 | $28.6 | | Adjustments: | | | | Loss on extinguishment of debt | $3.6 | — | | IT transformation costs | $1.9 | $2.5 | | Salaried pension plan surplus asset distribution | $3.6 | — | | As adjusted (Net income) | $11.6 | $32.8 | | As adjusted (Diluted EPS) | $0.27 | $0.71 | - Adjusted net income for the six months ended June 30, 2025, decreased to $11.6 million from $32.8 million in the prior year period[45] - Significant adjustments for the 2025 six-month period include a $3.6 million loss on extinguishment of debt and a $3.6 million salaried pension plan surplus asset distribution[45] Reconciliation of EBITDA and Adjusted EBITDA Q2 2025 Adjusted EBITDA was $26.5 million (8.7% margin), an increase from prior periods, while the six-month Adjusted EBITDA was $44.2 million (7.6% margin) EBITDA and Adjusted EBITDA (Three Months Ended) | (Dollars in millions) | June 30, 2025 | June 30, 2024 | March 31, 2025 | | :-------------------- | :------------ | :------------ | :------------- | | Net income (loss) | $3.7 | $4.6 | $1.3 | | EBITDA | $21.7 | $17.1 | $15.4 | | EBITDA Margin | 7.1% | 5.8% | 5.5% | | Adjusted EBITDA | $26.5 | $19.9 | $17.7 | | Adjusted EBITDA Margin | 8.7% | 6.8% | 6.3% | EBITDA and Adjusted EBITDA (Six Months Ended June 30) | (Dollars in millions) | 2025 | 2024 | | :-------------------- | :------ | :------ | | Net income (loss) | $5.0 | $28.6 | | EBITDA | $37.1 | $57.7 | | EBITDA Margin | 6.3% | 9.4% | | Adjusted EBITDA | $44.2 | $63.3 | | Adjusted EBITDA Margin | 7.6% | 10.3% | - Adjusted EBITDA margin improved sequentially to 8.7% in Q2 2025 from 6.3% in Q1 2025[55] Reconciliation of Base Sales by End-Market Q2 2025 total net sales were $304.6 million, with base sales of $237.7 million, showing increases from Q1 2025, while six-month base sales decreased year-over-year Net Sales, Surcharges, and Base Sales by End-Market (Three Months Ended June 30, 2025) | End-Market | Ship Tons (000s) | Net Sales (million) | Surcharges (million) | Base Sales (million) | Net Sales / Ton | Surcharges / Ton | Base Sales / Ton | | :---------------- | :--------------- | :------------- | :-------------- | :-------------- | :-------------- | :--------------- | :--------------- | | Industrial | 66.5 | $104.4 | $28.6 | $75.8 | $1,570 | $430 | $1,140 | | Automotive | 69.6 | $122.8 | $24.8 | $98.0 | $1,764 | $356 | $1,408 | | Aerospace & Defense | 15.4 | $42.1 | $5.7 | $36.4 | $2,734 | $370 | $2,364 | | Energy | 16.2 | $30.8 | $7.8 | $23.0 | $1,901 | $481 | $1,420 | | Other | — | $4.5 | — | $4.5 | — | — | — | | Total | 167.7 | $304.6 | $66.9 | $237.7 | $1,816 | $399 | $1,417 | Net Sales, Surcharges, and Base Sales by End-Market (Six Months Ended June 30, 2025) | End-Market | Ship Tons (000s) | Net Sales (million) | Surcharges (million) | Base Sales (million) | Net Sales / Ton | Surcharges / Ton | Base Sales / Ton | | :---------------- | :--------------- | :------------- | :-------------- | :-------------- | :-------------- | :--------------- | :--------------- | | Industrial | 132.8 | $206.1 | $55.2 | $150.9 | $1,552 | $416 | $1,136 | | Automotive | 133.7 | $236.0 | $46.4 | $189.6 | $1,765 | $347 | $1,418 | | Aerospace & Defense | 24.0 | $74.6 | $9.1 | $65.5 | $3,108 | $379 | $2,729 | | Energy | 30.1 | $59.5 | $14.5 | $45.0 | $1,977 | $482 | $1,495 | | Other | — | $8.9 | — | $8.9 | — | — | — | | Total | 320.6 | $585.1 | $125.2 | $459.9 | $1,825 | $391 | $1,434 | - Base sales for Q2 2025 increased to $237.7 million from $222.2 million in Q1 2025, while for the six months ended June 30, 2025, base sales decreased to $459.9 million from $487.3 million in the prior year[65][66] Calculation of Total Liquidity As of June 30, 2025, Metallus reported total liquidity of $437.0 million, comprising cash and available borrowing capacity, a decrease from December 31, 2024 Total Liquidity Calculation | (Dollars in millions) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $190.8 | $240.7 | | Credit Agreement: | | | | Maximum availability | $400.0 | $400.0 | | Suppressed availability | $(148.5) | $(176.8) | | Availability not borrowed | $246.2 | $217.9 | | Total Liquidity | $437.0 | $458.6 | - Total liquidity decreased by $21.6 million from December 31, 2024, to June 30, 2025, primarily due to a reduction in cash and cash equivalents[69] Adjusted EBITDA Walks Adjusted EBITDA increased from $19.9 million in Q2 2024 to $26.5 million in Q2 2025, driven by volume, raw material spread, and manufacturing improvements Adjusted EBITDA Walk (Q2 2024 vs. Q2 2025) | (Dollars in millions) | Impact | | :-------------------- | :----- | | Beginning Adjusted EBITDA (2024 2Q) | $19.9 | | Volume | $8.3 | | Price/Mix | $(12.4)| | Raw Material Spread | $5.8 | | Manufacturing | $6.2 | | SG&A | $(2.5) | | Other | $1.2 | | Ending Adjusted EBITDA (2025 2Q) | $26.5 | Adjusted EBITDA Walk (Q1 2025 vs. Q2 2025) | (Dollars in millions) | Impact | | :-------------------- | :----- | | Beginning Adjusted EBITDA (2025 1Q) | $17.7 | | Volume | $4.3 | | Price/Mix | $(0.2) | | Raw Material Spread | $0.9 | | Manufacturing | $3.6 | | SG&A | $0.3 | | Other | $(0.1) | | Ending Adjusted EBITDA (2025 2Q) | $26.5 | - Volume and manufacturing improvements were key positive drivers for Adjusted EBITDA both year-over-year and sequentially[71]