Metallus(US:MTUS)2023-08-04 17:07Financial Data and Key Metrics Changes - In Q2 2023, net sales totaled $356.6 million, a sequential increase of 10% from $323.5 million in Q1 2023, but a decrease from $415.7 million in Q2 2022 [17] - Net income for Q2 2023 was $28.9 million, or $0.62 per diluted share, compared to $14.4 million, or $0.30 per diluted share in Q1 2023, and $74.5 million, or $1.42 per diluted share in Q2 2022 [17] - Adjusted EBITDA was $50.5 million in Q2 2023, a 40% increase from Q1 2023, but a decrease of $33.7 million from the record $84.2 million in Q2 2022 [19][20] - Operating cash flow was $13.3 million, marking the 17th consecutive quarter of positive operating cash flow [28] Business Line Data and Key Metrics Changes - Shipments in Q2 2023 were 177,500 tons, a 3% increase from Q1 2023 [22] - Industrial shipments increased by 9% sequentially to 78,400 tons, driven by demand in defense and mining sectors [12][22] - Mobile customer shipments were 79,500 tons, a slight decrease of 1% from Q1 2023 [23] - Energy shipments were relatively flat, totaling 19,600 tons, a 3% decrease from Q1 2023 [23] Market Data and Key Metrics Changes - Base sales in EV-related products grew by 77% year-over-year, with the company awarded approximately 20 essential component parts for EVs [9] - The average raw material surcharge per ton increased by 22% due to higher scrap and alloy prices [25] Company Strategy and Development Direction - The company plans to invest $5 million in two additional manufactured component machining lines to support EV component production, expected to be operational by late 2024 [10] - The company aims to achieve $80 million in profitability improvement initiatives by 2026, focusing on commercial excellence and manufacturing reliability [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about ongoing positive macroeconomic trends, particularly in electric and hybrid vehicle production [9] - The company anticipates modest increases in industrial and mobile sales, with energy demand expected to remain flat [38] Other Important Information - The company invested approximately $4 million in safety training and programs in the first half of 2023, part of a total commitment of $7 million for the year [7] - Capital expenditures for 2023 are forecasted to be approximately $50 million, up from a previous estimate of $45 million [29] Q&A Session Summary Question: Outlook for industrial growth in the second half of the year - Management expects modest increases in industrial sales, particularly in the defense sector, while energy demand is anticipated to remain flat [38] Question: Ability to track new business and customer captures - Management noted solid growth in EV products but indicated limited new customer captures [40] Question: Expectations for melt utilization in Q3 - Management believes reaching 80% melt utilization is reasonable, with positive improvements already observed [45] Question: Raw material spread expectations for Q3 - Management expects further compression on the raw material spread in Q3 due to the volatility of scrap prices [42] Question: Details on new machining lines and future demand - The investment in new lines is specifically aimed at the EV market, aligning capabilities with increasing demand [47]