Metallus (MTUS) FY Conference Summary Company Overview - Metallus is a specialty metals manufacturing company based in Canton, Ohio, with over 100 years of operation, previously a division of Timken Company until its spinout in 2014 as Timken Steel, and rebranded to Metallus in 2024 [4][5] - The company employs approximately 1,900 people, including 1,200 United Steel workers [5] Financial Performance - In the last fiscal year, Metallus shipped approximately 555,000 tons with a 60% melt utilization, resulting in $1.1 billion in sales [7] - The first half of the current year saw a 28% increase in shipments compared to the second half of the previous year [7] - The second quarter of the current year reported net sales exceeding $300 million, a sequential increase of $24 million (9%) driven by higher shipments across all end markets [23] - Adjusted EBITDA for the second quarter represented the highest quarterly profits in over a year, with operating cash flow at 1.3x EBITDA [23] Market Position and Product Offerings - Metallus has a 12% share of the U.S. Special Bar Quality (SBQ) steel consumption and a 40% share in seamless mechanical tubing [8][9] - The company serves diverse end markets, including automotive, industrial, energy, and aerospace/defense [10][12] - Notably, Metallus is the sole domestic producer of specialized high fragmentation steel for the U.S. Army, with a $100 million contract to increase capacity for 155mm shells [13] Growth Initiatives - The company is targeting $250 million in sales to the defense market by 2026, more than double historical sales levels [15] - Metallus is also focusing on vacuum arc remelt steel, aiming for $30 million in sales in this market in 2025 [18] - Investments in production capacity and operational efficiencies are expected to yield annual savings of approximately $10 million starting in 2026 [28] Challenges and Cost Management - Planned annual shutdown costs are expected to be around $15 million in the second half of the year, with $3 million to $5 million in non-recurring labor agreement costs anticipated [25][27] - Higher electricity costs are projected to add $2 million to $3 million in quarterly expenses [26] Strategic Outlook - Metallus maintains a disciplined capital allocation strategy, targeting $250 million to $300 million in liquidity and focusing on organic and inorganic growth opportunities [31][32] - The company has reduced its pension liability from over $1 billion in 2021 to less than $500 million today, with a funded position of about 84% [34] - Metallus has a share buyback authorization with over $93 million remaining, having reduced diluted shares by over 25% since early 2022 [35] Investment Rationale - Metallus presents an attractive entry point for investors, with a strong balance sheet, liquidity, and a focus on operational efficiencies [36] - The company is positioned to benefit from domestic production trends and government investments in national defense [37] Additional Opportunities - The company is exploring additional funding opportunities, including a potential $10 million bill from Congress for expanding capabilities [39]