Metallus(US:MTUS)2026-02-20 15:02Financial 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 [13] - The fourth quarter GAAP net loss was $14.3 million, or 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 [14] - Adjusted EBITDA for the fourth quarter was $2.4 million, below expectations due to lower volumes and compressed raw material spread [8][14] Business Line Data and Key Metrics Changes - VAR sales totaled approximately $28 million, almost doubling from 2024, reflecting strong growth in aerospace and defense [4] - The company is increasing hourly staffing levels in areas with accelerated demand, such as seamless mechanical tube production [6][9] - The order book has increased more than 50% year-over-year, indicating strong demand for domestic steel [9][21] Market Data and Key Metrics Changes - Industrial markets remain soft, but the global trade environment is creating new opportunities as customers reevaluate supply chains [10] - Auto sales and production are expected to be slightly down, with pricing pressure persisting as OEMs prioritize margins [10] - Aerospace and defense outlook remains 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, outstanding customer service, and product development in aerospace and defense, supporting a strategy for sustainable growth [11] - Significant progress has been made in advancing manufacturing capabilities, including the ramp-up of a new automated grinding line [7] - The company aims to strengthen operational foundations and improve execution in 2026 through targeted organizational changes and operational enhancements [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a stronger order book entering 2026, with expectations for improved melt utilization and operational performance [20][34] - The company anticipates a sequential increase in average melt utilization rate and expects first quarter shipments to increase by approximately 10% compared to the fourth quarter [20][21] - Management remains cautious about external variables but expects year-over-year adjusted EBITDA growth in each quarter of 2026 [23] Other Important Information - The company received $4.1 million in government funding as part of a nearly $100 million arrangement to support munitions production [16] - Required pension contributions for 2026 are expected to total approximately $27 million, a nearly 60% reduction from 2025 [17] - Total liquidity remains strong at $389 million as of December 31, 2025, with no outstanding borrowings [18] Q&A Session Summary Question: Inquiry about fourth quarter labor negotiation costs - Management indicated no additional costs were incurred from labor negotiations in the fourth quarter as the agreement was settled in early February [27][30] Question: Expectations for melt utilization improvement - Management stated that improvements in melt utilization are based on both volume and expectations from third-party advisory programs [34] Question: Demand expectations for A&D in 2026 - Management noted that A&D demand is expected to continue growing, with several new customers and programs contributing to this growth [40][41] Question: Status of key capital investments - Management confirmed that the bloom reheat furnace and roller hearth furnace are on track for commissioning in the first half of 2026 [50][51] Question: Share count and depreciation and amortization - Management explained that diluted shares would increase slightly due to net loss positions, while depreciation and amortization are expected to remain flat due to consistent capital spend [52][54]