Metallus Inc.

(dollars in millions, except per share data)

Note 1 - Basis of Presentation

The accompanying unaudited Consolidated Financial Statements have been prepared by Metallus Inc. (the “Company” or “Metallus”) in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to Metallus' audited Consolidated Financial Statements and Notes included in its Annual Report on Form 10-K for the year ended December 31, 2024.

Note 2 - Recent Accounting Pronouncements

Adoption of New Accounting Standards

The Company did not adopt any new Accounting Standard Updates (“ASU”) in the third quarter of 2025.

Accounting Standards Issued But Not Yet Adopted

The Company has considered the recent ASU's issued by the Financial Accounting Standards Board summarized below:

Note 3 - Segment Reporting

We conduct our business activities and report financial results asone business segment. The presentation of financial results asone reportable segment is consistent with the way the Company operates its business and is consistent with the manner in which the Chief Operating Decision Maker ("CODM") evaluates performance and makes resource and operating decisions for the business as described above. Our CODM is our Chief Executive Officer. Furthermore, the Company notes that monitoring financial results as one reportable segment helps the CODM manage costs on a consolidated basis, consistent with the integrated nature of the operations. The CODM uses Net Income (Loss), as reported on our Consolidated Statements of Operations, in evaluating performance of the Company and determining how to allocate resources of the Company as a whole. As the CODM evaluates performance on a consolidated basis, all required financial segment information is included in our consolidated financial statements.

Note 4 - Government Funding

On February 27, 2024, the Company entered into an agreement with the United States Army ("U.S. Army"). The agreement providesfor $99.75 million in funding 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. For thethree and nine months ended September 30, 2025, the Company received $10.0 million and $28.0 million, respectively, in funding related to this agreement and recorded the funding as a current liability on the Consolidated Balance Sheets and as investing within the Consolidated Cash Flows. For thethree and nine months ended September 30, 2025 there was $22.0 million and $51.2 million, respectively, in capital spending related to assets associated with this agreement.

In October 2025, the Company received an additional $4.1 million in government funding related to this agreement.

For further details, refer to Metallus' “Note 2 - Significant Accounting Policies” in its annual report on Form 10K for the year ended December 31, 2024.

Note 5 - Revenue Recognition

The following table provides the major sources of revenue by end-market sector for thethree and nine months ended September 30, 2025 and 2024:

(1) “Other” sales by end-market sector relates to the Company’s scrap sales.

The following table provides the major sources of revenue by product type for the three and nine months ended September 30, 2025 and 2024:

(2)“Other” sales by product type relates to the Company’s scrap sales.

Note 6 - Restructuring Charges

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.

Metallus recorded reserves for such restructuring charges as other current liabilities on the Consolidated Balance Sheets. The reserve balance at September 30, 2025 is expected to be used in the next twelve months.

Note 7 – Other (Income) Expense, net

The following table provides the components of other (income) expense, net for thethree and nine months ended September 30, 2025 and 2024:

Non-service related pension and other postretirement benefit income, for all years, consists primarily of the interest cost, expected return on plan assets and amortization components of net periodic cost.

For more details on the aforementioned remeasurements, refer to “Note 12 - Retirement and Postretirement Plans.”

Note 8 - Income Tax Provision

Metallus’ provision for income taxes in interim periods is computed by applying the appropriate estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items, including interest on prior-year tax liabilities, are recorded during the periods in which they occur.

Income tax expense for the three months ended September 30, 2025 was calculated using forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate. 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.

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.

For the nine months ended September 30, 2025, Metallus made $0.2 million in state and local tax payments, and $0.1 million in foreign tax payments, andno U.S. federal tax payments. For thenine months ended September 30, 2024, Metallus made $21.5 million in U.S. federal payments, $6.1 million in state and local tax payments, and $0.2 million in foreign tax payments.

On July 4, 2025, the reconciliation bill, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which incl udes 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.

Note 9 - Earnings (Loss) Per Share

Basic earnings (loss) per share is computed based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed based upon the weighted average number of common shares outstanding plus the dilutive effect of common share equivalents calculated using the treasury stock method or if-converted method. For the Convertible Notes, the Company utilizes the if-converted method to calculate diluted earnings (loss) per share. Under the if-converted method, the Company adjusts net earnings to add back interest expense (including amortization of debt issuance costs) recognized on the Convertible Notes and includes the number of shares potentially issuable related to the Convertible Notes in the weighted average shares outstanding. Treasury shares are excluded from the denominator in calculating both basic and diluted earnings (loss) per share.

Equity-based Awards

Common share equivalents for shares issuable for equity-based awards amounted to 2.9 million shares and 2.7 million shares for thethree and nine months ended September 30, 2025, respectively. For the three and nine months ended September 30, 2025,0.1 million shares and 0.7 million shares, respectively, were excluded from the computation of diluted earnings (loss) per share, primarily related to options with exercise prices above the average market price of our common shares (i.e., “underwater” options), because the effect of their inclusion would have been anti-dilutive. The difference between the remaining 2.8 million shares and 2.0 million shares assumed issued and the 1.6 million shares and 1.1 million shares assumed purchased with potential proceeds for thethree and nine months ended September 30, 2025, respectively, were included in the denominator of the diluted earnings (loss) per share calculation.

Common share equivalents for shares issuable for equity-based awards amounted to 2.4 million shares for the three months ended September 30, 2024. For the three months ended September 30, 2024, common share equivalents for shares issuable for equity-based awards were excluded from the computation of diluted earnings (loss) per share, because the effect of their inclusion would have been anti-dilutive.

Common share equivalents for shares issuable for equity-based awards amounted to 2.6 million shares for the nine months ended September 30, 2024. For the nine months ended September 30, 2024,0.6 million shares were excluded from the computation of diluted earnings (loss) per share, primarily related to options with exercise prices above the average market price of our common shares (i.e., “underwater” options), because the effect of their inclusion would have been anti-dilutive. The difference between the remaining 2.0 million shares assumed issued and the 0.9 million shares assumed purchased with potential proceeds for the nine months ended September 30, 2024 were included in the denominator of the diluted earnings (loss) per share calculation.

Convertible Notes

Common share equivalents for shares issuable upon the conversion of outstanding Convertible Notes were included in the computation of diluted earnings (loss) per share for the nine months ended September 30, 2025 as these shares would be dilutive.

The reduction in the dilutive effect on convertible notes during the third quarter of 2025 is attributable to the settlement of outstanding Convertible Notes that occurred in the second quarter of 2025. For additional details regarding the Convertible Notes please refer to "Note 11 - Financing Arrangements."

The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted earnings (loss) per share for thethree and nine months ended September 30, 2025 and 2024:

Note 10 - Inventories

The components of inventories, net of reserves as of September 30, 2025 and December 31, 2024 were as follows:

Note 11 - Financing Arrangements

For a detailed discussion of the Company's long-term debt and credit arrangements, refer to “Note 11 - Financing Arrangements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

The following table summarizes the current and non-current debt as of September 30, 2025 and December 31, 2024:

Credit Agreement

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 existing secured Third Amended and Restated Credit Agreement, dated as of October 15, 2019.

As of September 30, 2025, the amount available under the Amended Credit Agreement was$245.4 million, reflective of the Company’s asset borrowing base withno outstanding borrowings. Additionally, the Company is in compliance with all covenants outlined in the Amended Credit Agreement.

Convertible Senior Notes due 2025

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, total cash paid to the noteholder was $9.1 million and a loss on extinguishment of debt of $3.6 million was recognized.

Interest (Income) Expense, net

The following table provides the components of interest (income) expense, net for thethree and nine months ended September 30, 2025 and 2024:

Interest income primarily relates to interest earned on cash invested in a money market fund and deposits with financial institutions. As of September 30, 2025, the carrying value of the Company's money market investment was $51.6 million, which approximates the fair value. The Company had $125.9 million in cash invested in a money market fund as of September 30, 2024. The money market fund is a cash equivalent and is included in cash and cash equivalents on the Consolidated Balance Sheets. The fund consists of highly liquid investments with an average maturity of three months or less and falls within Level 1 of the fair value hierarchy as defined by applicable accounting guidance. Additionally, as of September 30, 2025 and 2024, the Company has$96.3 and $124.1 million, respectively, of cash held in other accounts which generate interest income at a rate similar to the money market fund.

The total cash interest paid for the nine months ended September 30, 2025 and 2024 was $0.9 million and $1.3 million, respectively.

Treasury Shares

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.

For the three months ended September 30, 2025, the Company repurchased approximately 0.2 million common shares in the open market at an aggregate cost of $3.0 million, which equates to an average repurchase price of $16.38 per share. For thenine months ended September 30, 2025, the Company repurchased approximately 0.9 million common shares in the open market at an aggregate cost of $11.9 million, 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 on its authorized share repurchase program.

For the three months ended September 30, 2024, the Company repurchased approximately 1.2 million common shares in the open market at an aggregate cost of $20.1 million, which equates to an average repurchase price of $17.29 per share. For thenine months ended September 30, 2024, the Company repurchased approximately 1.8 million common shares in the open market at an aggregate cost of $34.1 million, which equates to an average repurchase price of $18.82 per share.

In October 2025, the Company repurchased approximately 0.1 million common shares at an aggregate cost of $1.1 million, which equates to an average repurchase price of $17.06 per share. As of October 31, 2025, the Company had a balance of $89.8 million remaining under its authorized share repurchase program.

Note 12 - Retirement and Postretirement Plans

Plan Amendments and Updates

Bargaining Plan

On October 29, 2021, the United Steelworkers ("USW") Local 1123 voted to ratify a newfour-year contract (the “Contract”). The Contract, which resulted in several changes to the Bargaining Plan including but not limited to closing the plan to new entrants effective January 1, 2022. For a detailed discussion of the Company's Bargaining Plan changes, refer to “Note 12 - Retirement and Postretirement Plans” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

In the three months ended September 30, 2025, the Company contributedno pension contributions. 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. Required future pension contribution timing and amounts are subject to significant change based on future investment performance, Company estimates and actuarial assumptions, as well as current funding laws.

Salaried Plan

During the fourth quarter of 2021, the Company's Board of Directors approved the termination of the Salaried Plan and the plan was terminated effective March 31, 2022, subject to regulatory approval which was received in the fourth quarter of 2023. On May 15, 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 Salaried Plan annuitization settled approximately $121 million of the Company’s remaining U.S. pension obligations. Prudential began future benefit payments under the group annuity contract starting August 1, 2024 for all remaining particip ants in the Salaried Plan. Benefits payable to Salaried Plan participants were not reduced as a result of the annuitization. The group annuity contract was purchased using existing assets of the Salaried Plan and required no cash contribution from the Company. Following the completion of the annuity contract, there were surplus assets which were used to make a one-time 401(k) contribution to eligible employees. As a result, the Company recognized a loss of $3.6 million in the first quarter of 2025 when the remaining assets were distributed.

Pension Net Periodic Benefit Cost (Income)

The components of net periodic benefit cost (income) for thethree months ended September 30, 2025 were as follows:

The components of net periodic benefit cost (income) for the three months ended September 30, 2024 were as follows:

The components of net periodic benefit cost (income) for the nine months ended September 30, 2025 were as follows:

The components of net periodic benefit cost (income) for the nine months ended September 30, 2024 were as follows:

The Bargaining Plan, Supplemental Plan and terminated Salaried Plan, each have a provision that permits employees to elect to receive their pension benefits in a lump sum upon retirement. The Company's accounting policy is to recognize settlements during the quarter in which it is projected that the costs of all settlements during the year will be greater than the sum of the service cost and interest cost components.

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.

In the second quarter of 2024, the Company entered into an agreement to purchase a group annuity contract from 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.

Note 13 – Stock-Based Compensation

During the nine months ended September 30, 2025 the Board of Directors granted 623,750 time-based restricted stock units and 329,580 performance-based restricted stock units, which primarily relates to the annual grant to our employees and grants to the Board of Directors. During the nine months ended September 30, 2024 the Board of Directors granted 427,996 time-based restricted stock units and 205,944 performance-based restricted stock units, which relates to the annual grant to our employees and Board of Directors.

Time-based restricted stock units are issued with the fair value equal to the closing market price of Metallus common shares on the date of grant. These restricted stock units do not have any performance conditions for vesting. Expense is recognized over the service period, adjusted for any forfeitures that occur during the vesting period. The weighted average fair value of the restricted stock units granted during the nine months ended September 30, 2025 was $14.06 per share.

Performance-based restricted stock units issued in 2025 vest based on achievement of a total shareholder return (“TSR”) metric. The TSR metric is considered a market condition, which requires Metallus to reflect it in the fair value on grant date using an advanced option-pricing model. The fair value of each performance share was therefore determined using a Monte Carlo valuation model, a generally accepted lattice pricing model under ASC 718 – Stock-based Compensation. The Monte Carlo valuation model, among other factors, uses commonly-accepted economic theory underlying all valuation models, estimates fair value using simulations of future share prices based on stock price behavior and considers the correlation of peer company returns in determining fair value. The fair value of the performance-based restricted stock units granted during the nine months ended September 30, 2025 was $17.31 per share.

Metallus recognized stock-based compensation expenseof $3.8 million and $10.9 million for thethree and nine months ended September 30, 2025, respectively, compared to $3.5 million and $10.5 million for thethree and nine months ended September 30, 2024, respectively. Future stock-based compensation expense related to the unvested portion of all awards is approximately $22.1 million. The future expense is expected to be recognized over the remaining vesting periods through 2028.

Note 14 - Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) for thenine months ended September 30, 2025 and 2024 by component were as follows:

The amount reclassified from accumulated other comprehensive income (loss) in the nine months ended September 30, 2025 and 2024 for the pension and postretirement liability adjustment was included in other (income) expense, net in the unaudited Consolidated Statements of Operations.

Note 15 – Contingencies

Metallus has a number of loss exposures incurred in the ordinary course of business, such as environmental claims, product warranty claims, employee-related matters, and other litigation. Establishing loss reserves for these matters requires management’s estimate and judgment regarding risk exposure and ultimate liability or realization. These loss reserves are reviewed periodically and adjustments are made to reflect the most recent facts and circumstances. Accruals related to environmental claims represent management’s best estimate of the fees and costs associated with these claims. Although it is not possible to predict with certainty the outcome of such claims, management believes that their ultimate dispositions should not have a material adverse effect on our financial position, cash flows or results of operations.

Note 16 – Subsequent Events

On October 3, 2025, the Company and United Steelworkers ("USW") Local 1123 reached a tentative agreement on a newfour 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.