Metallus Inc

Previous wording

Critical Accounting Policies: An overview of accounting policies identified by the Company as critical that, as a result of the judgments, uncertainties, and the operations involved, could result in material changes to its financial condition or results of operations under different conditions or using different assumptions.

Current wording

Critical Accounting Policies: An overview of accounting policies identified by the Company as critical that, as a result of the judgments, uncertainties, and the operations involved, could result in material changes to our financial condition or results of operations under different conditions or using different assumptions.

Previous wording

Base sales: The Company's products continued to demand strong base sales prices throughout 2023, with average base sales price per ton improving in all end-markets compared with 2022.

Current wording

Base sales: The Company's products continued to demand solid base sales prices throughout 2024, with average base sales price per ton improving in aerospace & defense, automotive and energy end-markets compared with 2023.

Previous wording

Capital investments: The Company continues to invest organically with $51.6 million of capital investments. Investments included targeted spending for improved safety, equipment automation, and continuous improvement to drive best-in-class quality and asset reliability, as well as additional manufactured component capacity for profitable growth.

Current wording

Capital investments: The Company continues to invest organically with $64.3 million of capital investments. Investments included targeted spending for improved safety, equipment automation, and continuous improvement to drive best-in-class quality and asset reliability.

Previous wording

Shareholder returns: The Company repurchased approximately 1.7 million common shares at a cost of $32.9 million, or $19.03 per share. In addition, the Company repurchased $7.5 million of its outstanding convertible notes at a cost of $18.7 million. Combined, the 2023 common share and convertible note repurchase activity reduced diluted shares outstanding by 2.7 million shares on a go-forward basis.

Current wording

Shareholder returns: The Company repurchased approximately 2.0 million common shares at a cost of $37.6 million, or $18.45 per share. In addition, the Company repurchased $7.8 million of its outstanding convertible notes at a cost of $17.2 million. Combined, the 2024 common share and convertible note repurchase activity reduced diluted shares outstanding by 3.0 million shares on a go-forward basis.

Previous wording

Liquidity: Our balance sheet has remained strong, with total liquidity of $539.4 million, including cash and cash equivalents of $280.6 million as of December 31, 2023. Operating cash flow of $125.3 million in 2023 was primarily driven by profitability, partially offset by higher working capital.

Current wording

Liquidity: Our balance sheet has remained strong, with total liquidity of $458.6 million, including cash and cash equivalents of $240.7 million as of December 31, 2024.

Previous wording

Rebranding: On January 10, 2024, we announced our rebranding of the Company under the name Metallus Inc. We believe this change reflects our expertise in high-performance specialty metals and positions us for growth beyond carbon steel.

Current wording

Rebranding: On February 26, 2024, the Company changed its name to Metallus Inc. We believe this change reflects our expertise in high-performance specialty metals and positions us for growth beyond carbon steel.

Previous wording

Net sales for the year ended December 31, 2023 were $1,362.4 million, an increase of $32.5 million, or 2.4%, compared with the year ended December 31, 2022. The increase in sales was primarily driven by favorable price/mix, partially offset by a decrease in surcharges and lower volume. Favorable price/mix of $116.9 million was primarily due to higher base prices across all end-markets. Lower market prices for scrap drove the unfavorable surcharges of $75.0 million, partially offset by higher alloy prices. Lower volume of 8.3 thousand ship tons resulted in a net sales decrease of $9.4 million. Excluding surcharges, net sales increased $107.5 million or 11.8%.

Current wording

Net sales for the year ended December 31, 2024 were $1,084.0 million, a decrease of $278.4 million, or 20.4%, compared with the year ended December 31, 2023. The decrease in net sales was driven by lower shipments and surcharges, partially offset by favorable price/mix. Lower shipments of 128.3 thousand ship tons resulted in a net sales decrease of $191.5 million. Lower market prices for scrap and alloys and the impact of lower shipments drove the unfavorable surcharges of $120.9 million. Favorable price/mix of $34.0 million was primarily due to higher base prices in the aerospace & defense, automotive and energy end-markets. Excluding surcharges, net sales decreased $157.7 million or 15.4%.

Previous wording

The chart below presents the drivers of the gross profit variance from the year ended December 31, 2022 to the year ended December 31, 2023.

Current wording

The chart below presents the drivers of the gross profit variance from the year ended December 31, 2023 as compared to the year ended December 31, 2024.

Previous wording

SG&A expense for the year ended December 31, 2023 increased by $10.8 million, or 14.6%, compared with the year ended December 31, 2022. This increase was primarily due to higher stock-based compensation, variable compensation expense and professional services, primarily driven by the ongoing information technology transformation project.

Current wording

SG&A expense for the year ended December 31, 2024 increased by $3.1 million, or 3.7%, compared with the year ended December 31, 2023. The increase was primarily due to higher salary and benefits, stock-based compensation and professional services, primarily driven by the ongoing information technology transformation project, partially offset by lower variable compensation.

Previous wording

Impairment Charges & Loss (Gain) on Sale or Disposal of Assets, net

Current wording

Loss (Gain) on Sale or Disposal of Assets, net

Previous wording

For the year ended December 31, 2023, the gain on sale or disposal of assets, net, of $2.5 million primarily related to the sale of the small-diameter seamless mechanical tubing machinery and equipment, partially offset by write-offs of aged assets removed from service. For the year ended December 31, 2022, the loss on sale or disposal of assets, net, of $1.9 million primarily related to the loss recognized on the sale of the remaining land and buildings at the Company's TMS facility, as well as write-offs of aged assets removed from service.

Current wording

For the year ended December 31, 2024, the Company recorded a loss on sale or disposal of assets, net, of $0.6 million primarily related to the write-offs of aged assets removed from service. For the year ended December 31, 2023, the gain on sale or disposal of assets, net, of $2.5 million primarily related to the sale of the small-diameter seamless mechanical tubing machinery and equipment, partially offset by write-offs of aged assets removed from service. For the year ended December 31, 2022, the loss on sale or disposal of assets, net, of $1.9 million primarily related to the loss recognized on the sale of the remaining land and buildings at the Company's former facility in Houston, Texas, as well as write-offs of aged assets removed from service.

Previous wording

Refer to “Note 6 - Disposition of Non-Core Assets” and “Note 11 - Property, Plant and Equipment” in the Notes to the Consolidated Financial Statements for additional information.

Current wording

Refer to “Note 9 - Property, Plant and Equipment” in the Notes to the Consolidated Financial Statements for additional information.

Previous wording

Net interest income for the year ended December 31, 2023 was $7.1 million, compared with net interest expense of $0.6 million for the year ended December 31, 2022. The change was due to interest earned on cash invested in a money market fund and deposits with financial institutions at a rate similar to the money market fund during 2023, as well as a reduction in average outstanding convertible notes compared to the same period in 2022. Refer to “Note 14 - Financing Arrangements” in the Notes to the Consolidated Financial Statements for additional information.

Current wording

Net interest income for the year ended December 31, 2024 was $9.6 million, compared with net interest income of $7.1 million for the year ended December 31, 2023. The change was due to interest earned on greater average cash invested in a money market fund and in other accounts which generate interest income at a rate similar to the money market fund during 2024. Refer to “Note 11 - Financing Arrangements” in the Notes to the Consolidated Financial Statements for additional information.

Previous wording

The Company's Bargaining Unit Pension Plan ("Bargaining Plan"), Retirement Plan (“Salaried Plan”), and the Supplemental Pension Plan ("Supplemental Plan") each have a provision that permits employees to elect to receive their pension benefits in a lump sum upon retirement. In the first quarter of 2023, the cumulative cost of all lump sum payments was projected to exceed the sum of the service costs and interest cost components of net periodic pension cost for the Salaried Plan. As a result, the Company completed a full remeasurement of its pension obligations and plan assets associated with the Salaried Plan during each quarter of 2023.

Current wording

The Company's Bargaining Unit Pension Plan ("Bargaining Plan"), the Supplemental Pension Plan ("Supplemental Plan") and the recently terminated Retirement Plan ("Salaried Plan") each have a provision that permits employees to elect to receive their pension benefits in a lump sum upon retirement. In the first quarter of 2024, the cumulative cost of all lump sum payments was expected to exceed the sum of the service cost and interest cost components of net periodic pension cost for the Salaried Plan. As a result, the Company completed a full remeasurement of its pension obligations and plan assets associated with the Salaried Plan during the first quarter of 2024 and recorded a loss of $0.8 million.

Previous wording

A net loss of $40.6 million from the remeasurement of these benefit plans was recognized for the year ended December 31, 2023. This loss was driven by a $36.6 million increase in the pension liability primarily due to a decrease in discount rate, updated census data and updates to certain underlying assumptions, as well as a loss of $4.0 million due to investment losses on plan assets.

Current wording

A net loss of $40.6 million from the remeasurement of all Company pension and postretirement benefit plans was recognized for the year ended December 31, 2023. This loss was driven by a $36.6 million increase in the pension liability primarily due to a decrease in discount rate, updated census data and updates to certain underlying assumptions, as well as a loss of $4.0 million due to investment losses on plan assets.

Previous wording

A net gain of $35.4 million from the remeasurement of these benefit plans was recognized for the year ended December 31, 2022. This gain was driven by a $359.9 million decrease in the pension liability primarily due to an increase in discount rates and a $2.7 million non-cash settlement related to the partial annuitization of the Bargaining Plan. This was partially offset by a loss of $327.2 million driven primarily by investment losses on plan assets and lump sum basis losses.

Current wording

A net gain of $35.4 million from the remeasurement of all Company pension and postretirement benefit plans was recognized for the year ended December 31, 2022. This gain was driven by a $359.9 million decrease in the pension liability primarily due to an increase in discount rates and a $2.7 million non-cash settlement related to the partial annuitization of the Bargaining Plan. This was partially offset by a loss of $327.2 million driven primarily by investment losses on plan assets and lump sum basis losses.

Previous wording

During 2023, the Company recognized insurance recoveries of $31.3 million related to the 2022 Faircrest melt shop unplanned downtime, of which $11.3 million was received during 2023 and $20.0 million was received in the first quarter of 2024. The 2022 insurance claims were closed as of the first quarter of 2024. Metallus recognizes an insurance recovery when it is realized or considered realizable, in accordance with the accounting guidance.

Current wording

During the second half of 2022, the Faircrest melt shop experienced unplanned operational downtime. Metallus recognizes an insurance recovery when it is realized or considered realizable, in accordance with the accounting guidance. The 2022 insurance claims were closed in the first quarter of 2024. Insurance recovery activity for the years ended December 31, 2024, 2023 and 2022 were as follows:

Previous wording

During the fourth quarter of 2023, the Company received a commitment from the State of Ohio related to the overpayment of sales and use taxes for the period of January 1, 2020 through March 31, 2023. This resulted in a gain recognized of $1.4 million, net of related professional fees, for the year ended December 31, 2023. During the second quarter of 2021, the Company received a refund from the State of Ohio related to an overpayment of sales and use taxes for the period of October 1, 2016 through September 30, 2019. This resulted in a gain recognized of $2.5 million, net of related professional fees, for the year ended December 31, 2021.

Current wording

During the fourth quarter of 2023, the Company received a commitment from the State of Ohio related to the overpayment of sales and use taxes for the period of January 1, 2020 through March 31, 2023. This resulted in a gain recognized of $1.4 million, net of related professional fees, for the year ended December 31, 2023.

Previous wording

The provision for incomes taxes for the year ended December 31, 2023 was $27.0 million compared to a provision for income taxes of $32.0 million in 2022. The change from the prior year is primarily related to higher permanent items for the year ended December 31, 2022 compared with December 31, 2023. The provision for income taxes for the year ended December 31, 2022 was also impacted by the release of the Company’s income tax valuation allowance on domestic deferred tax assets due to consecutive years of positive net income and the utilization of the majority of loss carryforwards generated in prior years.

Current wording

The provision for incomes taxes for the year ended December 31, 2024 was $3.3 million compared to a provision for income taxes of $27.0 million in 2023. The change from the prior year is primarily related to the impact of permanent items on a lower pre-tax net income for the year ended December 31, 2024 as compared to December 31, 2023. The provision for income taxes differs from the statutory rate due to the impact of permanent tax differences and state and local taxes.

Previous wording

The tables below present net sales by end-markets, adjusted to exclude surcharges, which represents a financial measure that has not been determined in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). We believe presenting net sales by end-markets, both on a gross basis and on a per ton basis, adjusted to exclude raw material and natural gas surcharges, provides additional insight into key drivers of net sales such as base price and product mix. Due to the fact that the surcharge mechanism can introduce volatility to our net sales, net sales adjusted to exclude surcharges provides management and investors clarity of our core pricing and results. Presenting net sales by end-markets, adjusted to exclude surcharges including on a per ton basis, allows management and investors to better analyze key market indicators and trends and allows for enhanced comparison between our end-markets.

Current wording

The tables below present net sales by end-markets, adjusted to exclude surcharges, which represents a financial measure that has not been determined in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). We believe presenting net sales by end-markets, both on a gross basis and on a per ton basis, adjusted to exclude raw material and energy surcharges, provides additional insight into key drivers of net sales such as base price and product mix. Due to the fact that the surcharge mechanism can introduce volatility to our net sales, net sales adjusted to exclude surcharges provides management and investors clarity of our core pricing and results. Presenting net sales by end-markets, adjusted to exclude surcharges including on a per ton basis, allows management and investors to better analyze key market indicators and trends and allows for enhanced comparison between our end-markets.

Previous wording

When surcharges are included in a customer agreement and are applicable (i.e., reach the threshold amount), based on the terms outlined in the respective agreement, surcharges are then included as separate line items on a customer’s invoice. These additional surcharge line items adjust base prices to match cost fluctuations due to market conditions. Each month, the Company will post on the surcharges page of its external website, as well as our customer portal, the scrap, alloy, and natural gas surcharges that will be applied (as a separate line item) to invoices dated in the following month (based upon shipment volumes in the following month). All surcharges invoiced are included in GAAP net sales.

Current wording

When surcharges are included in a customer agreement and are applicable (i.e., reach the threshold amount), based on the terms outlined in the respective agreement, surcharges are then included as separate line items on a customer’s invoice. These additional surcharge line items adjust base prices to match cost fluctuations due to market conditions. Each month, the Company will post on the surcharges page of its external website, as well as our customer portal, the scrap, alloy, and energy surcharges that will be applied (as a separate line item) to invoices dated in the following month (based upon shipment volumes in the following month). All surcharges invoiced are included in GAAP net sales.

Previous wording

On September 30, 2022, the Company, as borrower, and certain domestic subsidiaries of the Company, as subsidiary guarantors (the “Subsidiary Guarantors”), entered into a Fourth Amended and Restated Credit Agreement (the “Amended Credit Agreement”), with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and the lenders party thereto (collectively, the “Lenders”), which further amended and restated the Company’s secured Third Amended and Restated Credit Agreement, dated as of October 15, 2019.

Current wording

On September 30, 2022, the Company, as borrower, and certain domestic subsidiaries of the Company, as subsidiary guarantors, entered into a Fourth Amended and Restated Credit Agreement (the “Amended Credit Agreement”), with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, which further amended and restated the Company’s secured Third Amended and Restated Credit Agreement, dated as of October 15, 2019.

Previous wording

In the first quarter of 2023, the Company repurchased a total of $7.5 million aggregate principal amount of its Convertible Senior Notes Due 2025. Total cash paid to noteholders was $18.7 million. A loss on extinguishment of debt was recognized of $11.4 million, including a charge of $0.2 million for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs. There were no repurchases related to the Convertible Notes during the remainder of 2023. As of

Current wording

In the first half of 2022, the Company repurchased a total of $25.2 million aggregate principal amount of its Convertible Senior Notes Due 2025. There were no repurchases related to the Convertible Notes during the second half of 2022. Total cash paid to noteholders was $67.6 million. A loss on extinguishment of debt was recognized of $43.0 million, including a charge of $0.6 million for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs.

Previous wording

December 31, 2023, the principal balance on the Convertible Senior Notes due 2025 is $13.3 million, while the Convertible Senior Notes due 2025, net is $13.2 million after consideration of unamortized debt issuance costs.

Current wording

$13.3 million, while the Convertible Senior Notes due 2025, net is $13.2 million after consideration of unamortized debt issuance costs.

Previous wording

In the first half of 2022, the Company repurchased a total of $25.2 million aggregate principal amount of its Convertible Senior Notes Due 2025. There were no repurchases related to the Convertible Notes during the second half of 2022. Total cash paid to noteholders was $67.6 million. A loss on extinguishment of debt was recognized of $43.0 million, including a charge of $0.6 million for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs. The principal amount of the Convertible Senior Notes due 2025 as of December 31, 2022 was $20.8 million, while the Convertible Senior Notes due 2025, net was $20.4 million after consideration of unamortized debt issuance costs.

Current wording

In the fourth quarter of 2024, the Company repurchased a total of $7.8 million aggregate principal amount of its Convertible Senior Notes due 2025. Total cash paid to noteholders was $17.2 million. A loss on extinguishment of debt of $9.4 million was recognized, including a charge of $0.1 million for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs. As of December 31, 2024, the principal balance of the Convertible Senior Notes due 2025 was $5.5 million, while the Convertible Senior Notes due 2025, net is $5.4 million after consideration of unamortized debt issuance costs.

Previous wording

Our principal sources of liquidity are cash and cash equivalents, cash flows from operations and available borrowing capacity under our Amended Credit Agreement. As of December 31, 2023, taking into account our view of industrial, automotive, aerospace & defense and energy market demand for our products, and our 2024 operating and long-range plan, we believe that our cash balance as of December 31, 2023, projected cash generated from operations, and borrowings available under the Amended Credit Agreement, will be sufficient to satisfy our working capital needs, capital expenditures and other liquidity requirements associated with our operations, including servicing our debt and pension and postretirement benefit obligations, for at least the next twelve months.

Current wording

Our principal sources of liquidity are cash and cash equivalents, cash flows from operations and available borrowing capacity under our Amended Credit Agreement. As of December 31, 2024, taking into account our view of industrial, automotive, aerospace & defense and energy market demand for our products, and our 2025 operating and long-range plan, we believe that our cash balance as of December 31, 2024, projected cash generated from operations, borrowings available under the Amended Credit Agreement and committed government funding to support capital investments, will be sufficient to satisfy our working capital needs, capital expenditures and other liquidity requirements associated with our operations, including servicing our debt and pension and postretirement benefit obligations, for at least the next twelve months.

Previous wording

We continually evaluate the best use of our liquidity which would allow us to invest in profitable growth, maintain a strong balance sheet, and return capital to shareholders. We are currently anticipating capital expenditures to be approximately $60 million in 2024.

Current wording

We continue to evaluate the best use of our liquidity which would allow us to invest in profitable growth, maintain a strong balance sheet, and return capital to shareholders. We expect capital expenditures to be approximately $125 million in 2025, inclusive of approximately $90 million of capital expenditures funded by the U.S. government.

Previous wording

On November 2, 2022, the Board of Directors authorized an additional $75.0 million share repurchase program. This authorization reflects the continued confidence of the Board and senior leadership in the Company’s ability to generate sustainable through-cycle profitability while maintaining a strong balance sheet and cash flow. The share repurchase program does not require the Company to acquire any dollar amount or number of shares and may be modified, suspended, extended or terminated by the Company at any time without prior notice.

Current wording

On December 20, 2021 Metallus announced that its Board of Directors authorized a share repurchase program under which the Company may repurchase up to $50.0 million of its outstanding common shares. On November 2, 2022, the Board of Directors authorized an additional $75.0 million towards its share repurchase program and on May 6, 2024 the Board of Directors authorized an additional $100.0 million. The share repurchase program is intended to return capital to shareholders while also offsetting dilution from annual equity compensation awards. The share repurchase program does not require the Company to acquire any dollar amount or number of shares and may be modified, suspended, extended or terminated by the Company at any time without prior notice. These authorizations reflect the continued confidence of the Board and senior leadership in the Company’s ability to generate sustainable through-cycle profitability while maintaining a strong balance sheet and cash flow.

Previous wording

For the year ended December 31, 2023, the Company repurchased approximately 1.7 million common shares in the open market at an aggregate cost of $32.6 million, which equates to an average repurchase price of $19.03 per share. As of December 31, 2023, the Company had a balance of $40.4 million remaining under its share repurchase program.

Current wording

For the year ended December 31, 2024, the Company repurchased approximately 2.0 million common shares in the open market at an aggregate cost of $37.6 million, which equates to an average repurchase price of $18.45 per share. As of December 31, 2024, the Company had a balance of $102.8 million remaining under its share repurchase program. In total during 2024, 2023 and 2022, the Company repurchased 6.7 million common shares in the open market at an aggregate cost of $122.2 million.

Previous wording

Subsequent to December 31, 2023, the Company repurchased 0.1 million additional common shares in the open market at an aggregate cost of $1.2 million, which equates to an average repurchase price of $21.07 per share. As of February 15, 2024, the Company has $39.2 million remaining under its authorized share repurchase program.

Current wording

Subsequent to December 31, 2024, the Company repurchased 0.2 million additional common shares in the open market at an aggregate cost of $3.3 million, which equates to an average repurchase price of $14.61 per share. As of February 17, 2025, the Company has $99.5 million remaining under its authorized share repurchase program.

Previous wording

Net cash provided by operating activities for the year ended December 31, 2023 was $125.3 million compared to net cash provided of $134.5 million for the year ended December 31, 2022. The change was primarily due to a higher use of cash for working capital in 2023, partially offset by improved 2023 profitability.

Current wording

Net cash provided by operating activities for the year ended December 31, 2024 was $40.3 million compared to net cash provided of $125.3 million for the year ended December 31, 2023. The change was primarily driven by lower profitability and higher pension contributions, partially offset by a decrease in cash from working capital during 2024 compared to 2023.

Previous wording

Net cash used by investing activities for the year ended December 31, 2023 was $49.9 million compared to net cash used of $21.7 million for the year ended December 31, 2022. The change was primarily due to higher capital expenditures in 2023.

Current wording

Net cash used by investing activities for the year ended December 31, 2024 was $10.8 million compared to net cash used of $49.9 million for the year ended December 31, 2023. The change was due to proceeds from government funding in 2024 compared to receiving no government funding in 2023, partially offset by higher capital spending in 2024.

Previous wording

Net cash used by financing activities for the year ended December 31, 2023 was $51.9 million compared to net cash used of $114.6 million for the year ended December 31, 2022. The change was primarily due to lower repurchases of common shares and

Current wording

Net cash used by financing activities for the year ended December 31, 2024 was $68.9 million compared to net cash used of $51.9 million for the year ended December 31, 2023. The change was primarily due to higher shares surrendered for taxes and common share repurchases compared to the same time period in 2023.

Previous wording

Refer to “Note 14 - Financing Arrangements” in the Notes to the Consolidated Financial Statements for more information regarding scheduled maturities of our long-term debt. Interest payments include interest on the Convertible Notes, as well as the unused commitment fee of 25 basis points related to the Amended Credit Agreement. Interest payable associated with our debt will be approximately $1.8 million due in the next twelve months and $3.5 million through maturity.

Current wording

Refer to “Note 11 - Financing Arrangements” in the Notes to the Consolidated Financial Statements for more information regarding scheduled maturities of our long-term debt. Interest payments include interest on the Convertible Notes, as well as the unused commitment fee of 25 basis points related to the Amended Credit Agreement. Interest payable associated with our debt will be approximately $1.3 million due in the next twelve months and $1.7 million through maturity.

Previous wording

Purchase commitments are defined as agreements to purchase goods or services that are enforceable and legally binding. As of December 31, 2023, our undiscounted purchase commitments are approximately $49.1 million due in the next twelve months and $67.4 million due thereafter. Included in purchase commitments are certain obligations related to capital asset commitments, service agreements and energy consumed in our production processes. These purchase commitments do not represent our entire anticipated purchases in the future but represent only those items for which we are contractually obligated as of December 31, 2023. The majority of our products and services are purchased as needed, with no advance commitment. We do not have any off-balance sheet arrangements with unconsolidated entities or other persons.

Current wording

Purchase commitments are defined as agreements to purchase goods or services that are enforceable and legally binding. As of December 31, 2024, our undiscounted purchase commitments are approximately $117.1 million due in the next twelve months and $77.4 million due thereafter. Included in purchase commitments are certain obligations related to capital asset commitments, service agreements and energy consumed in our production processes. These purchase commitments do not represent our entire anticipated purchases in the future but represent only those items for which we are contractually obligated as of December 31, 2024. The majority of our products and services are purchased as needed, with no advance commitment. We do not have any off-balance sheet arrangements with unconsolidated entities or other persons.

Previous wording

Retirement benefits are paid from plan assets and our operating cash flow. These include payments to meet minimum funding requirements of our defined benefit pension plans, estimated benefit payments for our unfunded supplemental executive retirement pension, and estimated benefit payments for our postretirement plans. The retirement benefit funding requirements are estimated required contributions and are significantly affected by asset returns and several other variables. These amounts are subject to change year to year. These amounts are based on Company estimates and current funding laws; actual future payments may be different. Based on the results of the December 31, 2023 pension calculations, the Company estimates required Bargaining Plan contributions of approximately $40 million in 2024, with approximately $25 million of contributions in the first quarter. Refer to “Note 15 - Retirement and Postretirement Plans” in the Notes to the Consolidated Financial Statements for further information related to the total pension and other postretirement benefit plans and expected benefit payments.

Current wording

Retirement benefits are paid from plan assets, cash and cash equivalents and borrowings available under the Amended Credit Agreement. These include payments to meet minimum funding requirements of our defined benefit pension plans, estimated benefit payments for our unfunded supplemental executive retirement pension, and estimated benefit payments for our postretirement plans. The retirement benefit funding requirements are estimated required contributions and are significantly affected by asset returns and several other variables. These amounts are subject to change year to year. These amounts are based on Company estimates and current funding laws; actual future payments may be different. Based on the results of the December 31, 2024 pension calculations, the Company estimates required Bargaining Plan contributions of approximately $65.0 million in 2025. Refer to “Note 12 - Retirement and Postretirement Plans” in the Notes to the Consolidated Financial Statements for further information related to the total pension and other postretirement benefit plans and expected benefit payments.

Previous wording

The Company’s contracts with certain Manufactured Components customers extend multiple years and generally average five years. While these contracts set the duration of time, they do not cover or guarantee volumes but rather are focused on piece prices, which are established at the inception of the contract. From time to time, subsequent pricing adjustments are agreed to through negotiation. Pricing adjustments are occasionally determined retroactively based on historical shipments. The Company recognizes revenue for these subsequent price adjustments when they are determined to be probable and estimable. For the year ended December 31, 2023, the Company recognized $16.0 million in subsequent pricing adjustments.

Current wording

The Company’s contracts with certain Manufactured Components customers extend multiple years and generally average five years. While these contracts set the duration of time, they do not cover or guarantee volumes but rather are focused on piece prices, which are established at the inception of the contract. From time to time, subsequent pricing adjustments are agreed to through negotiation. Pricing adjustments are occasionally determined retroactively based on historical shipments. The Company recognizes revenue for these subsequent price adjustments when they are determined to be probable and estimable.

Previous wording

As of December 31, 2023, our projected benefit obligations related to our pension and other postretirement benefit plans were $688.6 million and $84.9 million, respectively, and the underfunded status of our pension and other postretirement benefit obligations were $163.0 million and $31.1 million, respectively. These benefit obligations were valued using a weighted average discount rate of 5.33% for pension benefit plans and 5.43% for other postretirement benefit plans. The determination of the discount rate is generally based on an index created from a hypothetical bond portfolio consisting of high-quality fixed income securities with durations that match the timing of expected benefit payments. Changes in the selected discount rate could have a material impact on our projected benefit obligations and the unfunded status of our pension and other postretirement benefit plans.

Current wording

As of December 31, 2024, our projected benefit obligations related to our pension and other postretirement benefit plans were $537.1 million and $80.1 million, respectively, and the underfunded status of our pension and other postretirement benefit obligations were $140.5 million and $30.7 million, respectively. These benefit obligations were valued using a weighted average discount rate of 5.71% for pension benefit plans and 5.73% for other postretirement benefit plans. The determination of the discount rate is generally based on an index created from a hypothetical bond portfolio consisting of high-quality fixed income securities with durations that match the timing of expected benefit payments. Changes in the selected discount rate could have a material impact on our projected benefit obligations and the unfunded status of our pension and other postretirement benefit plans.

Previous wording

For the year ended December 31, 2023, net periodic pension expense was $49.1 million and postretirement benefit income was $2.1 million, respectively. In 2023, net periodic pension expense and other postretirement benefit income was calculated using a variety of assumptions, including a weighted average discount rate of 5.61% and 5.70%, respectively, and a weighted average expected return on plan assets of 7.13% and 6.25%, respectively. The expected return on plan assets is determined based on forward-looking current market pricing. The forward-looking analysis is performed using a building block approach incorporating inputs such as current yields, valuations, economic data and broad macroeconomic themes.

Current wording

For the year ended December 31, 2024, net periodic pension expense was $18.4 million and postretirement benefit income was $4.0 million. In 2024, net periodic pension expense and other postretirement benefit income were calculated using a variety of assumptions, including a weighted average discount rate of 5.33% and 5.43%, respectively, and a weighted average expected return on plan assets of 7.15% and 5.80%, respectively. The expected return on plan assets is determined based on forward-looking current market pricing. The forward-looking analysis is performed using a building block approach incorporating inputs such as current yields, valuations, economic data and broad macroeconomic themes.

Previous wording

The net periodic benefit income and benefit obligation are affected by applicable year-end assumptions. Sensitivities to these assumptions may be asymmetric and are specific to the time periods noted. The impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities. The sensitivity to changes in discount rate assumptions may not be linear. A sensitivity analysis of the projected incremental effect of a 0.25% increase (decrease), holding all other assumptions constant, is as follows:

Current wording

The net periodic benefit cost and benefit obligation are affected by applicable year-end assumptions. Sensitivities to these assumptions may be asymmetric and are specific to the time periods noted. The impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities. The sensitivity to changes in discount rate assumptions may not be linear. A sensitivity analysis of the projected incremental effect of a 0.25% increase (decrease), holding all other assumptions constant, is as follows: