Metallus Inc.
For the period ended Sep 30, 2025. Filed Nov 6, 2025.
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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.
Sep 30, 2025 · Filed Nov 6, 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 2025-06-30; filed 2025-08-07.
0000950170-25-105098
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001193125-25-269669
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 103 previous paragraphs and 103 current paragraphs.
73 unchanged; 25 reworded; 5 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 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 (5)
Current report
Business Highlights
Current report
United Steelworkers (USW) contract: On October 3, 2025, the Company and United Steelworkers ("USW") Local 1123 reached a tentative agreement on a new four year labor agreement. On October 30, 2025, the USW membership voted against ratification of the tentative agreement. The parties have agreed to extend the current labor contract through January 29, 2026, and will continue negotiations.
Current report
Exit Incentive Program: During the third quarter of 2025, the Company offered an exit incentive program to certain retirement-eligible employees at the Company's corporate headquarters and manufacturing facilities to support succession planning and continue execution of the Company's sustainable profitable growth strategy. As a result, the Company recorded a $2.7 million restructuring reserve associated with the program. These charges primarily consist of severance and employee-related benefits.
Current report
The effective tax rate for the months ended September 30, 2025 was 25.7% compared to 16.9% in the three months ended September 30, 2024. The increase in the effective tax rate for the three months ended September 30, 2025 is primarily related to being in a taxable income position in the third quarter of 2025.
Current report
In October 2025, the Company contributed an additional $3.5 million to the Bargaining Plan, resulting in total 2025 pension contributions of $62.0 million.
Removed paragraphs (5)
Previous report
Q2 2025 Business Highlights
Previous 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.
Previous report
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 report
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 report
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.
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 and six months ended June 30, 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 nine months ended September 30, 2025.
Previous wording
The following items represent key trends and events during the three and six months ended June 30, 2025:
Current wording
The following items represent key trends and events during the three and nine months ended September 30, 2025:
Previous 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.
Current wording
Capital investments: The Company continues to invest organically with capital investments of $28.4 million and $73.7 million in the three and nine months ended September 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 $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.
Current wording
Defense Contract: In the three and nine months ended September 30, 2025, the Company received $10.0 million and $28.0 million, respectively, 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 $81.5 million of government funding, with total spend of $59.6 million.
Previous 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.
Current wording
Liquidity: Our balance sheet has remained strong, with total liquidity of $436.9 million, including cash and cash equivalents of $191.5 million as of September 30, 2025. Operating cash flow of $22.0 million in the third quarter was primarily driven by profitability. Operating cash flow totaled $17.9 million in the nine months ended September 30, 2025.
Previous 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.
Current wording
Share repurchase program: The Company repurc hased 0.2 million and 0.9 million common shares in the open market at an aggregate cost of $3.0 million and $11.9 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2025, the Company had a balance of $90.9 million remaining on 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 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.
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 actions taken to enact a minimum 50% tariff on steel imports, close loopholes in the tariff exclusion process, and expand derivative product coverage are expected to have a positive impact on the demand for domestic products. 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, including the impact on potential cost increases for certain materials and supplies.
Previous wording
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 wording
Net sales for the three months ended September 30, 2025 were $305.9 million, an increase of $78.7 million, or 34.6% compared with the three months ended September 30, 2024. The increase in net sales was primarily driven by higher shipments and favorable surcharges, partially offset by unfavorable price/mix. Higher volume of 43.2 thousand ship tons resulted in a net sales increase of $63.9 million. The increase in surcharges of $18.8 million was primarily due to an improvement in raw material surcharge revenue per ton as a result of higher scrap prices. Unfavorable price/mix of $4.0 million was driven by lower base prices across all end-market sectors. Excluding surcharges, net sales increased $59.9 million or 32.9%.
Previous wording
The charts below present net sales and shipments for the six months ended June 30, 2025 and 2024.
Current wording
The charts below present net sales and shipments for the nine months ended September 30, 2025 and 2024.
Previous 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%.
Current wording
Net sales for the nine months ended September 30, 2025 were $891.0 million, an increase of $47.5 million, or 5.6% compared with the nine months ended September 30, 2024. The increase in net sales was driven by higher shipments and surcharges, partially offset by unfavorable price/mix. Higher volume of 58.4 thousand ship tons resulted in a net sales volume improvement of $85.5 million. The increase in surcharges of $15.0 million was due to higher scrap prices and the favorable impact of higher shipments. Unfavorable price/mix of $53.0 million was primarily due to higher automotive shipments and lower base prices across industrial, energy and automotive end-market sectors. Excluding surcharges, net sales increased $32.5 million or 4.9%.
Previous 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.
Current wording
Gross profit for the three months ended September 30, 2025 increased $22.9 million, or 189.3% compared with the three months ended September 30, 2024. The increase was primarily driven by higher volume, favorable raw material spread and price/mix. All end-market sectors were favorably impacted by higher volume. Raw material spread was favorable due to higher shipments and scrap prices. Favorable price/mix was due to higher aerospace & defense shipments, partially offset by lower base prices across all end-markets. Unfavorable manufacturing was a net impact of better fixed cost leverage outpaced by an increase in energy and inflationary costs from certain materials and supplies.
Previous wording
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.
Current wording
The chart below presents the drivers of the gross profit variance from the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2025.
Previous wording
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 wording
Gross profit for the nine months ended September 30, 2025 increased $2.3 million, or 2.6% compared with the nine months ended September 30, 2024. The increase was driven by higher volume, favorable raw material spread, better manufacturing performance, partially offset by unfavorable price/mix. All end-market sectors were favorably impacted by higher volume. Raw material spread was favorable due to higher scrap prices and shipments. Improved manufacturing performance was primarily due to increased fixed cost leverage on higher production levels. Higher automotive shipments and lower base prices across all end-markets except aerospace & defense, resulted in unfavorable price/mix.
Previous wording
The charts below present selling, general and administrative (“SG&A”) expense for the three and six months ended June 30, 2025 and 2024.
Current wording
The charts below present selling, general and administrative (“SG&A”) expense for the three and nine months ended September 30, 2025 and 2024.
Previous wording
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 wording
SG&A expense for the three months ended September 30, 2025 increased by $2.0 million, or 8.9%, compared with the same period in 2024. The increase was primarily due to higher variable compensation and salary and benefits.
Previous 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.
Current wording
SG&A expense for the nine months ended September 30, 2025 increased by $4.4 million, or 6.5% compared with the nine months ended September 30, 2024. The increase was primarily due to higher variable compensation and salary and benefits.
Previous 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.
Current wording
Net interest income for the three and nine months ended September 30, 2025 was $1.4 million and $4.2 million, respectively, compared with net interest income of $2.4 million and $7.6 million for the three and nine months ended September 30, 2024, respectively. The decline in net interest income was primarily due to a combination of lower interest rates and average cash balances in 2025 compared to 2024. Refer to “Note 11 - Financing Arrangements” in the Notes to the unaudited Consolidated Financial Statements for additional information.
Previous wording
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 wording
The effective tax rate for the nine months ended September 30, 2025 was 41.5% compared to 21.7% in 2024. The increase in the effective tax rate for the nine months ended September 30, 2025 was primarily due to the limitations on the tax deductibility of the loss on extinguishment of debt on the Convertible Senior Notes due 2025, partially offset by lower net income.
Previous wording
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 wording
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 fixed asset bonus depreciation and research and development expenditures, that may affect the Company's financial results. The Company does not expect these provisions to have a material impact on the annual effective tax rate in 2025.The Company is currently evaluating the impact of provisions taking effect in future years, which could affect the Company’s effective tax rate, deferred tax assets, and cash taxes in future periods.
Previous wording
Our principal sources of liquidity are cash and cash equivalents, cash flows from operations and available borrowing capacity under our Credit Agreement. As of June 30, 2025, 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 June 30, 2025, projected cash generated from operations, borrowings available under the 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. 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.
Current wording
Our principal sources of liquidity are cash and cash equivalents, cash flows from operations and available borrowing capacity under our Credit Agreement. As of September 30, 2025, 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 September 30, 2025, projected cash generated from operations, borrowings available under the 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. We expect capital expenditures to be approximately $120 million in 2025, inclusive of approximately $90 million of capital expenditures funded by the U.S. government.
Previous 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.
Current wording
For the nine months ended September 30, 2025, the Company repurchased approximately 0.9 million common shares at an aggregate cost of $11.9 million in the open market, which equates to an average repurchase price of $14.31 per share. As of September 30, 2025, the Company had a balance of $90.9 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 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.
Current wording
The following table reflects the major categories of cash flows for the nine months ended September 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 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.
Current wording
Net cash provided by operating activities for the nine months ended September 30, 2025 was $17.9 million compared to net cash provided of $26.4 million for the nine months ended September 30, 2024. The change was primarily driven by higher working capital to support growing business needs, an increase in required pension contributions and lower net income during the nine months ended September 30, 2025 compared to the same period in 2024.
Previous 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.
Current wording
Net cash used by investing activities for the nine months ended September 30, 2025 was $44.0 million compared to net cash used of $3.6 million for the nine months ended September 30, 2024. The change was due to higher capital expenditures in the nine months ended September 30, 2025 compared to the same period in 2024, partially offset by proceeds from government funding.
Previous 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.
Current wording
Net cash used by financing activities for the nine months ended September 30, 2025 was $23.6 million compared to net cash used of $48.2 million in the nine months ended September 30, 2024. The change was primarily due to lower shares surrendered for taxes during the nine months ended 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.