Financial Data and Key Metrics Changes - In 2025, shipments improved by 14% year-over-year, indicating a commercial recovery after previous market headwinds [4] - Fourth quarter net sales totaled $267.3 million, a sequential decrease of $38.6 million primarily due to seasonality and slower ramp-up post-maintenance shutdown [12] - The fourth quarter GAAP net loss was $14.3 million, translating to a loss of $0.34 per diluted share, while adjusted net loss was $7.7 million or a loss of $0.18 per diluted share [13] - Adjusted EBITDA for the fourth quarter was $2.4 million, below expectations due to lower volumes and compressed raw material spreads [8][13] Business Line Data and Key Metrics Changes - VAR sales reached approximately $28 million, nearly doubling from 2024, driven by increased demand in aerospace and defense [4] - The company is increasing hourly staffing levels in areas with accelerated demand, particularly in seamless mechanical tube production [6][9] Market Data and Key Metrics Changes - The order book has increased by more than 50% year-over-year, reflecting growing demand for domestic steel [9][19] - Industrial markets remain soft, but the global trade environment is creating new opportunities as customers reevaluate supply chains [10] - Aerospace and defense outlook is robust, with strong growth expected through 2026, driven by existing program expansions and new platforms [11] Company Strategy and Development Direction - The company is focused on safety, customer service, and product development in aerospace and defense, alongside ongoing government-funded capital investments [11] - A new four-year labor agreement was reached, emphasizing safety, innovation, and long-term competitiveness, with annual wage increases and competitive benefits [6][21] - The company is investing in operational capabilities through a standardized efficiency initiative aimed at enhancing throughput and improving steel output quality [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a stronger operational foundation for 2026, despite fourth quarter performance being below expectations [8] - The company anticipates a slight usage of free cash flow in Q1 2026, with expectations for positive free cash flow for the remainder of the year [18] - Demand for solutions is expected to remain strong, with a typical seasonality reflected in first quarter shipments projected to increase by approximately 10% compared to Q4 [18][22] Other Important Information - The company generated $16 million of operating cash flow in 2025, with operational cash generation exceeding $80 million for the second consecutive year [14] - Capital expenditures for 2026 are expected to be approximately $70 million, including government-related expenditures [15] - The company repurchased approximately 71,000 shares of common stock for $1.2 million in Q4, reducing diluted shares outstanding by 25% since Q4 2021 [17] Q&A Session Summary Question: Labor negotiations costs in Q4 and Q1 2026 - Management indicated no additional costs incurred from labor negotiations in Q4, with a $2 million payment due in Q1 [25][26] Question: Expectations for Melt Utilization improvement - Management expects improvements in Melt Utilization to be volume dependent and influenced by a stronger order book entering 2026 [32] Question: Demand expectations for A&D in 2026 - Management believes A&D sales will meet the previously expected run rate of over $250 million, contingent on new capacity ramping up [48] Question: Status of key capital investments - The bloom reheat furnace is expected to be operational in the next month, with both the bloom and roller hearth furnaces ramping up by late Q2 or early Q3 [50][51] Question: Share count and depreciation and amortization - Management noted a slight increase in diluted shares due to net loss, with depreciation and amortization expected to remain flat due to consistent capital spend [52][54] Question: Customer growth in VAR and lead times - Management highlighted new customer acquisitions in VAR, with expectations to improve lead times as new assets ramp up [60][64]