Financial Data and Key Metrics Changes - In Q3 2025, net sales totaled $305.9 million, a sequential increase of $1.3 million, primarily driven by higher shipments in aerospace and defense and steady volume across automotive and industrial end markets [12] - Net income was $8.1 million, or $0.19 per diluted share, while adjusted net income was $12 million, or $0.28 per diluted share [12] - Adjusted EBITDA rose to $29 million, a sequential increase of 9%, driven by improved product mix and better fixed cost leverage [12][16] - Operating cash flow was $22 million, with a cash and cash equivalents balance of $191.5 million at the end of Q3 [13] Business Line Data and Key Metrics Changes - Aerospace and defense backlog increased approximately 80% year-over-year, contributing to a favorable product mix [6] - Industrial shipments decreased slightly on a sequential basis, while automotive shipments increased slightly [8][9] - Energy shipments remained at reduced volumes, but there is potential for increased customer share due to declining import levels and tightened tariff enforcement [9] Market Data and Key Metrics Changes - Customer feedback indicated that over 97% of respondents would recommend Metallus products, highlighting strong service and quality [5] - The company successfully sold to over two dozen new customers in 2025, indicating a shift towards domestic supply chain solutions [6] - The current lead times for SBQ bars extend to late January and February for seamless mechanical tubing products [7] Company Strategy and Development Direction - The company aims to secure approximately 70% of its long products business through annual agreements during commercial contract negotiations [6] - Metallus is focused on growing its participation in the vacuum arc remelt (VAR) steel product line and has executed a long-term supply agreement to strengthen its strategic position [10] - The company is committed to delivering value to shareholders by driving profitable growth and executing its capital allocation strategy [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future in the growing aerospace and defense market, with expectations to achieve a run rate of $250 million in annual A&D sales by mid-2026 [10] - The company anticipates lower shipments and slightly weaker product mix in Q4 due to normal year-end seasonality and potential global supply chain challenges [16] - Management remains committed to securing a fair labor agreement, with the current contract extended by 90 days to January 29, 2026 [11] Other Important Information - The company plans to spend $5 million to enhance safety management systems and critical equipment, with zero serious injuries reported in 2025 [4] - Capital expenditures for 2025 are approximately $120 million, slightly lower than previous guidance due to timing of cash payments [14] - The company repurchased 178,000 shares of common stock for $3 million in Q3, reflecting confidence in cash flow generation [15] Q&A Session Summary Question: Automotive business performance and domestic share - Management noted that automotive demand remained solid, with no disruptions from global supply chain challenges yet [20][22] Question: Labor negotiation costs incurred in Q3 - Management indicated that costs incurred were minimal, primarily related to negotiation activities [23] Question: Impact of tariffs on customers - Management stated that the tariff environment has been favorable, with increased inquiries from new customers seeking domestic supply chains [26] Question: Global supply chain challenges - Management highlighted concerns over chip supply and aluminum supply affecting automotive production, particularly with Ford [29] Question: Energy market volume rebound potential - Management indicated that oil prices and global demand will drive potential increases in energy market volumes [40] Question: Order book tracking relative to last year - Management expressed confidence in reaching the goal of being 70% booked for the upcoming year, with positive customer forecasts [43] Question: CapEx spend for next year - Management is in the planning phases for 2026 CapEx, with adjustments made due to timing issues [49] Question: New A&D awards and revenue recognition timing - Management expects significant growth in VAR VIM sales and munitions demand, with material revenue recognition anticipated in 2026 [52]