Metallus Inc.
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
MTUS$16.65+5.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0000950170-25-066985
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0000950170-25-105098
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 96 previous paragraphs and 103 current paragraphs.
69 unchanged; 25 reworded; 7 added; 1 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 5 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Convertible notes: The Company settled the remaining $5.5 million aggregate principal amount of its convertible notes outstanding at a cost of $9.1 million. As of June 30, 2025, the company has no outstanding borrowings.
Current report
Net sales for the six months ended June 30, 2025 were $585.1 million, a decrease of $31.2 million, or 5.1% compared with the six months ended June 30, 2024. The decrease in net sales was driven by unfavorable price/mix and surcharges, partially offset by higher shipments. Unfavorable price/mix of $50.2 million was primarily due to lower base prices across industrial, automotive and energy end-market sectors. Lower surcharge per ton resulted in a net sales decrease of $3.8 million. Higher volume of 15.3 thousand ship tons, resulted in a net sales increase of $22.8 million. Excluding surcharges, net sales decreased $27.4 million or 5.6%.
Current report
Gross profit for the three months ended June 30, 2025 increased $8.1 million, or 33.6% compared with the three months ended June 30, 2024. The increase was driven by higher volume, better manufacturing performance, favorable raw material spread, partially offset by unfavorable price/mix. All end-market sectors except aerospace & defense were favorably impacted by higher volume. Aerospace & defense volume was slightly lower primarily due to defense timing. Improved manufacturing performance was primarily due to increased fixed cost leverage on higher production levels. Raw material spread was favorable due to higher scrap prices, partially offset by lower alloy prices. Unfavorable price/mix was due to lower base prices across industrial, automotive, and energy end-markets.
Current report
SG&A expense for the six months ended June 30, 2025 increased by $2.4 million, or 5.4% compared with the six months ended June 30, 2024. The increase was primarily due to higher variable pay compensation and salary and benefits, partially offset by lower professional services.
Current report
The provision for income taxes for the three and six months ended June 30, 2025 was $4.9 million and $6.5 million compared to a provision for income taxes of $1.5 million and $7.5 million in 2024. The change in the effective tax rate is primarily related to lower net income for the three and six months ended June 30, 2025. In addition to lower net income, the increase for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 is also impacted by limitations on the tax deductibility of the loss on extinguishment of debt on the Convertible Senior Notes as the company settled its remaining convertible notes during the second quarter of 2025.
Current report
On July 4, 2025, the reconciliation bill, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which includes a broad range of tax reform provisions, including provisions related to bonus depreciation, research and development and foreign derived intangible income, that may affect the Company's financial results. The Company is currently evaluating the impact of these provisions which could affect the Company’s effective tax rate and deferred tax assets in 2025 and future periods.
Current report
Net Sales, Excluding Surcharges
Removed paragraphs (1)
Previous report
The provision for income taxes for the quarter ended March 31, 2025 was $1.6 million compared to $6.0 million in 2024. The change is primarily related lower pre-tax income in the first quarter of 2025.
Reworded paragraphs (25)
Previous wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help investors understand our results of operations, financial condition and current business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for the three months ended March 31, 2025.
Current wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help investors understand our results of operations, financial condition and current business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2025.
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 the Company's financial condition or results of operations under different conditions or using different assumptions.
Previous wording
The following items represent key trends and events during the three months ended March 31, 2025:
Current wording
The following items represent key trends and events during the three and six months ended June 30, 2025:
Previous wording
Capital investments: The Company continues to invest organically with $27.5 million of capital investments during the first quarter of 2025 including $13.9 million for projects funded by the U.S. government. Investments included targeted spending for improved safety, equipment automation, and continuous improvement to drive best-in-class quality and asset reliability, as well as new assets to increase throughput and efficiency which are being substantially funded by the U.S. government.
Current wording
Capital investments: The Company continues to invest organically with capital investments of $17.8 million and $45.3 million including $15.3 million and $29.2 million for projects funded by the U.S. governmentfor the three and six months ended June 30, 2025, respectively. Investments included targeted spending for improved safety, equipment automation, and continuous improvement to drive best-in-class quality and asset reliability, as well as new assets to increase throughput and efficiency which are being substantially funded by the U.S. government.
Previous wording
Defense contract: The Company received $12.9 million from the U.S. government as part of the previously announced $99.75 million funding agreement to support the U.S. Army's mission of increasing munitions production for national security in the upcoming years. The agreement supports the commissioning of two major assets: a continuous bloom reheat furnace and a roller hearth heat treat furnace. The Company expects the remaining funding to be provided as mutually agreed upon milestones are achieved throughout the project. The Company is targeting late 2025 for the new bloom reheat furnace to be operational and the first half of 2026 for the new roller furnace to be operational. To date, the Company has received $66.4 million of government funding, with total spend of $21.9 million, and expects additional funding to be provided under the previously announced agreements throughout 2025 and into early 2026 as mutually agreed upon milestones are achieved.
Current wording
Defense contract: The Company received $5.1 million during the second quarter of 2025 and $18.0 million in the first half of 2025 from the U.S. government as part of the previously announced $99.75 million funding agreement to support the U.S. Army's mission of increasing munitions production for national security in the upcoming years. The agreement supports the commissioning of two major assets: a continuous bloom reheat furnace and a roller hearth heat treat furnace. The Company expects the remaining funding to be provided as mutually agreed upon milestones are achieved throughout the project. The Company is targeting late 2025 for the new bloom reheat furnace to be operational and the first half of 2026 for the new roller furnace to be operational. To date, the Company has received $71.5 million of government funding, with total spend of $37.3 million, and expects additional funding to be provided under the previously announced agreements throughout 2025 and into early 2026 as mutually agreed upon milestones are achieved.
Previous wording
Liquidity: Our balance sheet has remained strong, with total liquidity of $432.0 million, including cash and cash equivalents of $180.3 million as of March 31, 2025. Operating cash outflow of $38.9 million in the first quarter 2025 was primarily driven by required pension contributions and higher working capital.
Current wording
Liquidity: Our balance sheet has remained strong, with total liquidity of $437.0 million, including cash and cash equivalents of $190.8 million as of June 30, 2025. Operating cash flow of $34.8 million in the second quarter 2025 was primarily driven by lower inventory and the receipt of an income tax refund, partially offset by required pension contributions.
Previous wording
Share repurchase program: The Company repurchased approximately 0.4 million common shares at a cost of $5.6 million, or $14.23 per share. As of March 31, 2025, the Company has $97.2 million remaining under its authorized share repurchase program.
Current wording
Share repurchase program: The Company repurchased 0.3 million and 0.4 million common shares in the open market at an aggregate cost of $3.3 million and $8.9 million for the three and six months ended June 30, 2025, respectively. As of June 30, 2025, the Company has $93.9 million remaining under its authorized share repurchase program.
Previous wording
Recent trade developments: The Company is closely monitoring recent trade developments, including increased, additional, and expanded tariffs on goods imported from various countries imposed by the U.S. government, as well as reciprocal tariffs on U.S. exports imposed by various countries. As a domestic steel producer, the recent actions taken to enact a minimum 25% tariff on steel imports and close loopholes in the tariff exclusion process are expected to have a positive impact on the demand for Metallus products and our financial results. The ultimate impact to the Company remains uncertain and will depend on several factors, including whether additional or incremental U.S. tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures, and the overall magnitude and duration of these measures.
Current wording
Recent trade developments: The Company is closely monitoring recent trade developments, including increased, additional, and expanded tariffs on goods imported from various countries imposed by the U.S. government, as well as reciprocal tariffs on U.S. exports imposed by various countries. As a domestic steel producer, the recent actions taken to enact a minimum 50% tariff on steel imports and close loopholes in the tariff exclusion process are expected to have a positive impact on the demand for Metallus products and our financial results. The ultimate impact to the Company remains uncertain and will depend on several factors, including whether additional or incremental U.S. tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures, and the overall magnitude and duration of these measures.
Previous wording
Net sales for the three months ended March 31, 2025 were $280.5 million, a decrease of $41.1 million, or 12.8%, compared with the three months ended March 31, 2024. The decrease in sales was primarily driven by unfavorable price/mix, a decrease in surcharges and lower volume. Unfavorable price/mix of $25.9 million was primarily due to lower base prices across end-markets as well as a smaller proportion of aerospace & defense shipments. Lower market prices for scrap primarily drove the unfavorable surcharges of $11.4 million. Lower volume of 2.3 thousand ship tons resulted in a net sales decrease of $3.8 million. Excluding surcharges, net sales increased $29.7 million or 11.8%.
Current wording
Net sales for the three months ended June 30, 2025 were $304.6 million, an increase of $9.9 million, or 3.4% compared with the three months ended June 30, 2024. The increase in net sales was driven by higher shipments and favorable surcharges, partially offset by unfavorable price/mix. Higher volume of 17.6 thousand ship tons resulted in a net sales increase of $26.4 million. Higher market prices for scrap drove the favorable surcharges of $7.6 million. Unfavorable price/mix of $24.1 million was primarily due to lower base prices across industrial, automotive, and energy end-market sectors. Excluding surcharges, net sales increased $2.3 million or 1.0%.
Previous wording
The chart below presents the drivers of the gross profit variance for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Current wording
The chart below presents the drivers of the gross profit variance from the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.
Previous wording
Gross profit for the three months ended March 31, 2025 decreased $28.7 million, or 56.7%, compared with the three months ended March 31, 2024. The decrease was driven by unfavorable price/mix and lower volume, partially offset by lower manufacturing costs. Unfavorable price/mix was due to lower base prices across end-markets as well as a smaller proportion of aerospace & defense shipments. The aerospace & defense and automotive end-markets were unfavorably impacted by lower shipments, partially offset by higher shipments to the industrial and energy end-markets. Favorable manufacturing costs were primarily due to lower maintenance and manufacturing consumables spend.
Current wording
Gross profit for the six months ended June 30, 2025 decreased $20.6 million, or 27.6% compared with the six months ended June 30, 2024. The decrease was driven by unfavorable price/mix, partially offset by better manufacturing performance, higher volume and favorable raw material spread. Unfavorable price/mix was due to lower base prices across industrial, automotive, and energy end-markets. Increased fixed cost leverage on higher production and lower plant spend resulted in favorable manufacturing performance. The industrial and energy end-market sectors were favorably impacted by higher volume.
Previous wording
The charts below present selling, general and administrative (“SG&A”) expense for the three months ended March 31, 2025 and 2024.
Current wording
The charts below present selling, general and administrative (“SG&A”) expense for the three and six months ended June 30, 2025 and 2024.
Previous wording
SG&A expense for the three months ended March 31, 2025 increased by $0.2 million, or 0.8%, compared with the three months ended March 31, 2024. The increase was primarily due to higher salary and benefits, variable pay compensation and professional services, primarily driven by the ongoing information technology transformation project.
Current wording
SG&A expense for the three months ended June 30, 2025 increased by $2.2 million, or 10.6% compared with the three months ended June 30, 2024. The increase was primarily due to higher variable pay compensation and salary and benefits.
Previous wording
Net interest income for the three months ended March 31, 2025 was $1.5 million compared with $2.8 million for the three months ended March 31, 2024. The change was due to interest earned on lower 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 2025. Refer to “Note 10 - Financing Arrangements” in the Notes to the unaudited Consolidated Financial Statements for additional information.
Current wording
Net interest income for the three and six months ended June 30, 2025 was $1.3 million and $2.8 million, respectively, compared with net interest income of $2.4 million and $5.2 million for the three and six months ended June 30, 2024, respectively. The change was due to interest earned on lower 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 2025. Refer to “Note 10 - Financing Arrangements” in the Notes to the unaudited Consolidated Financial Statements for additional information.
Previous wording
The Company's Bargaining Unit Pension Plan ("Bargaining Plan"), the Supplemental Pension Plan ("Supplemental Plan") and the Retirement Plan ("Salaried Plan"), which was terminated during the second quarter of 2024, 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.
Current wording
The Company's Bargaining Unit Pension Plan ("Bargaining Plan"), the Supplemental Pension Plan ("Supplemental Plan") and the 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 loss of $0.8 million from the remeasurement of the Salaried Plan was recognized for the three months ended March 31, 2024. This loss was due to $1.5 million of investment losses on plan assets and lump sum basis losses, partially offset by a $0.7 million decrease in the liability due to an increase in the discount rate.
Current wording
In the second quarter of 2024, the Company entered into an agreement to purchase a group annuity contract from The Prudential Insurance Company of America (‘Prudential”) in connection with the annuitization of the Salaried Plan. The Company remeasured the Salaried Plan upon annuitization on May 15, 2024. A loss of $1.0 million from the remeasurement of the Salaried Plan was recognized for the three months ended June 30, 2024. The loss was primarily due to investment losses on plan assets of $1.8 million, partially offset by a decrease in the liability of $0.7 million due to an increase in the discount rate. In addition, the three months ended June 30, 2024 included a $0.1 million gain as a result of the completion of the Salaried Plan annuitization.
Previous wording
The Convertible Senior Notes due 2025 are convertible at the option of holders in certain circumstances and during certain periods into the Company’s common shares, cash, or a combination thereof, at the Company’s election. The Indenture for the Convertible Senior Notes due 2025 provides that notes will become convertible during a quarter when the share price for 20 trading days during the final 30 trading days of the immediately preceding quarter was greater than 130% of the conversion price. This criterion was met during the fourth quarter of 2024, and, as such, the notes can be converted at the option of the holder beginning January 1 through March 31, 2025. During the first quarter of 2025, the Company received notice of conversion from the remaining Convertible Senior Note holder to convert the outstanding notes. The Company expects to settle the convertible obligation, including the outstanding principal of $5.5 million, in cash, during the second quarter of 2025.
Current wording
The principal amount of the Convertible Senior Notes due 2025 upon issuance was $46.0 million. Transaction costs related to the Convertible Senior Notes due 2025 incurred upon issuance were $1.5 million. These costs were amortized to interest expense over the term of the notes. The Indenture for the Convertible Senior Notes due 2025 provided that notes will become convertible during a quarter when the share price for 20 trading days during the final 30 trading days of the immediately preceding quarter was greater than 130% of the conversion price. This criterion was met during the fourth quarter of 2024, and the only remaining noteholder requested to settle the notes during the first quarter of 2025. During the second quarter of 2025, in accordance with the procedures set forth in the Indenture, the Company repaid, in cash, the remaining $5.5 million principal amount of the Convertible Senior Notes. Based on the fair value, the total cash paid to the noteholder was $9.1 million and a loss on extinguishment of debt of $3.6 million was recognized.
Previous wording
The following represents a summary of key liquidity measures under the Credit Agreement as of March 31, 2025 and December 31, 2024:
Current wording
The following represents a summary of key liquidity measures under the Amended Credit Agreement as of June 30, 2025 and December 31, 2024:
Previous wording
(1) As of March 31, 2025, and December 31, 2024, the Company had less than $400.0 million in collateral assets to borrow against.
Current wording
(1) As of June 30, 2025, and December 31, 2024, Metallus had less than $400.0 million in collateral assets to borrow against.
Previous wording
In the first quarter of 2025, the Company contributed a total of $52.6 million in pension contributions, most of which related to the Bargaining Plan. In April 2025, the Company contributed an additional $5.9 million to the Bargaining Plan and anticipates additional contributions of approximately $10 million to the Bargaining Plan throughout the remainder of 2025.
Current wording
In the first half of 2025, the Company contributed a total of $58.5 million in pension contributions, most of which related to the Bargaining Plan, and anticipates additional contributions of approximately $3.5 million to the Bargaining Plan throughout the remainder of 2025.
Previous wording
For the three months ended March 31, 2025, the Company repurchased approximately 0.4 million common shares at an aggregate cost of $5.6 million in the open market, which equates to an average repurchase price of $14.23 per share. As of March 31, 2025, the Company had a balance of $97.2 million remaining under its share repurchase program. 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.
Current wording
For the six months ended June 30, 2025, the Company repurchased approximately 0.7 million common shares at an aggregate cost of $8.9 million in the open market, which equates to an average repurchase price of $13.75 per share. As of June 30, 2025, the Company had a balance of $93.9 million remaining under its share repurchase program. 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
The following table reflects the major categories of cash flows for the three months ended March 31, 2025 and 2024. For additional details, please refer to the unaudited Consolidated Statements of Cash Flows included in this quarterly report.
Current wording
The following table reflects the major categories of cash flows for the six months ended June 30, 2025 and 2024. For additional details, please refer to the unaudited Consolidated Statements of Cash Flows included in this quarterly report.
Previous wording
Net cash used by operating activities for the three months ended March 31, 2025 was $38.9 million compared to net cash provided of $33.4 million for the three months ended March 31, 2024. The change was primarily driven by first quarter of 2025 profitability, an increase in first quarter of 2025 required pension contributions, a higher working capital use of cash in the first quarter 2025 to support a sequential increase in net sales, and insurance recoveries received in 2024.
Current wording
Net cash used by operating activities for the six months ended June 30, 2025 was $4.1 million compared to net cash provided of $41.7 million for the six months ended June 30, 2024. The change was primarily driven by higher working capital use of cash in the first half of 2025, lower profitability in the first half of 2025, an increase in first half 2025 required pension contributions, and insurance recoveries received in 2024, partially offset by the receipt of an income tax refund in 2025.
Previous wording
Net cash used by investing activities for the three months ended March 31, 2025 was $12.9 million compared to net cash used of $17.4 million for the three months ended March 31, 2024. The change was due to proceeds from government funding in the three months ended March 31, 2025 compared to 2024, partially offset by higher capital spending in the three months ended March 31, 2025.
Current wording
Net cash used by investing activities for the six months ended June 30, 2025 was $25.6 million compared to net cash used of $21.5 million for the six months ended June 30, 2024. The change was due to higher capital expenditures in the first half of 2025 compared to the first half of 2024, partially offset by proceeds from government funding.
Previous wording
Net cash used by financing activities for the three months ended March 31, 2025 was $8.2 million compared to net cash used of $18.7 million for the three months ended March 31, 2024. The change was primarily due to lower shares surrendered for taxes during the first quarter of 2025 compared to the same period in 2024, partially offset by higher repurchases of common shares in 2025 compared to the same period in 2024.
Current wording
Net cash used by financing activities for the six months ended June 30, 2025 was $20.6 million compared to net cash used of $28.1 million for the six months ended June 30, 2024. The change was primarily due to lower shares surrendered for taxes during the first half of 2025 compared to the same period in 2024, lower repurchases of common shares in 2025 compared to the same period in 2024, partially offset by the repurchase of Convertible Notes during the second quarter of 2025.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The charts below present net sales and shipments for the six months ended June 30, 2025 and 2024.
Current report — wording carried from elsewhere
The chart below presents the drivers of the gross profit variance from the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net Sales Adjusted to Exclude Surcharges