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, 2025.

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 2026.

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. During the first half of 2026, the Company received the final $17.2 million in funding related this agreement. For the three and nine months ended September 30, 2025, the Company received $10.0 million and $28.0 million, respectively. The Company recorded the funding as investing within the Consolidated Cash Flows.

During the third quarter of 2026, the related assets were fully commissioned and depreciation commenced. Accordingly, the Company reclassified the associated government funding liability as a reduction to property, plant, and equipment, net. Additional capital expenditures are still expected as the Company completes remaining ancillary components of the projects. For the three and nine months ended September 30, 2026 and 2025, capital spending related to assets associated with this agreement was $4.9 million and $32.7 million in 2026 and $22.0 million and $51.2 million in 2025, respectively.

For further details, refer to Metallus' “Note 2 - Significant Accounting Policies” in its annual report on Form 10K for the year ended December 31, 2025.

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, 2026 and 2025:

(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, 2026 and 2025:

(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, 2026 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, 2026 and 2025:

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.”

During the third quarter of 2026, the Company recognized a $2.0 million gain in other income related to a negotiated agreement with a vendor that modified and resolved an outstanding obligation.

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, 2026 was calculated using forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate. The effective tax rate for the three months ended September 30, 2026 and 2025 was 26.3% and 25.7%, respectively, remaining relatively consistent year over year.

The effective tax rate for the nine months ended September 30, 2026 and 2025 was 27.0% and 41.5%. The decrease is primarily related to higher pre-tax income and the limitations on the tax deductibility of the loss on extinguishment of debt on the Convertible Senior Notes in the prior year.

For the nine months ended September 30, 2026, Metallus madeno U.S. federal tax payments, $0.5 million in state and local tax payments, and $0.1 million in foreign tax payments. For the nine months ended September 30, 2025, Metallus madeno U.S. federal tax payments, $0.2 million in state and local tax payments, and $0.1 million in foreign tax payments.

For the nine months ended September 30, 2026, Metallus received $2.2 million in U.S. federal tax refunds, $3.2 million in state and local tax refunds, andno foreign tax refunds. For the nine months ended September 30, 2025, Metallus received $6.5 million in U.S. federal tax refunds, no state and local tax refunds, andno foreign tax refunds.

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 for both thethree and nine months ended September 30, 2026. For the three and nine months ended September 30, 2026,0.1 million shares and 0.6 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 2.3 million shares assumed issued and the 1.1 million shares and 0.8 million shares assumed purchased with potential proceeds for thethree and nine months ended September 30, 2026, 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 2.9 million shares and 2.7 million shares for the three 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 the three and nine months ended September 30, 2025, respectively, 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. There is no dilution on the Convertible Notes in 2026 as these were settled during the second quarter of 2025.

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, 2026 and 2025:

Note 10 – Inventories

The components of inventories, net of reserves as of September 30, 2026 and December 31, 2025 were as follows:

Note 11 – Financing Arrangements

Amended Credit Agreement

On June 30, 2026, the Company, as borrower, and certain domestic subsidiaries of the Company, as subsidiary guarantors (the “Subsidiary Guarantors”), entered into a Fifth 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 amends and restates the Company’s existing secured Fourth Amended and Restated Credit Agreement, dated as of September 30, 2022.

The Amended Credit Agreement provides for a $300.0 million asset-based revolving credit facility (the “Credit Facility”), including a $15.0 million sublimit for the issuance of commercial and standby letters of credit and a $40.0 million sublimit for swingline loans. Pursuant to the terms of the Amended Credit Agreement, the Company is entitled, on up to four occasions and subject to the satisfaction of certain conditions, to request increases in the commitments under the Amended Credit Agreement in the aggregate principal amount of up to $200.0 million, to the extent that existing or new lenders agree to provide such additional commitments. In addition to and independent of any increase described in the preceding sentence, the Company is entitled, subject to the satisfaction of certain conditions, to request a separate “first-in, last-out” tranche (the “Incremental FILO Tranche”) in an aggregate principal amount of up to $30.0 million with a separate borrowing base and interest rate margins, in each case, to be agreed upon among the Company, the Administrative Agent and the Lenders providing the Incremental FILO Tranche.

The availability of borrowings under the Credit Facility is subject to a borrowing base calculation based upon a valuation of the eligible accounts receivable, inventory and machinery and equipment of the Company and the Subsidiary Guarantors, each multiplied by an applicable advance rate. The availability of borrowings may be further modified by reserves established from time to time by the Administrative Agent in its permitted discretion.

The interest rate per annum applicable to loans under the Credit Facility will be, at the Company’s option, equal to either (i) the Alternate Base Rate (as defined in the Amended Credit Agreement) plus the applicable margin or (ii) the Adjusted Term SOFR Rate (as defined in the Amended Credit Agreement) plus the applicable margin. The applicable margin will be determined by a pricing grid based on the Company’s average quarterly availability. The Alternate Base Rate is subject to a 1.00% floor, and the Adjusted Term SOFR Rate is subject to 0.00% floor. In addition, the Company will pay a 0.25% per annum commitment fee on the daily unused amount of the Credit Facility.

The proceeds of the Credit Facility will be used to finance working capital, capital expenditures, certain permitted acquisitions and other general corporate purposes. All of the indebtedness under the Credit Facility is guaranteed by the Company’s material domestic subsidiaries, as well as any other domestic subsidiary that the Company elects to make a party to the Amended Credit Agreement, and is secured by substantially all of the personal property of the Company and the Subsidiary Guarantors.

The Credit Facility matures on June 30, 2031. Prior to the maturity date, amounts outstanding are required to be repaid (without reduction of the commitments thereunder) from mandatory prepayment events from the proceeds of certain asset sales, equity or debt issuances or casualty events.

The Amended Credit Agreement contains certain customary covenants, including covenants that limit the ability of the Company and its subsidiaries to, among other things, (i) incur or suffer to exist certain liens, (ii) make investments, (iii) incur or guaranty additional indebtedness, (iv) enter into consolidations, mergers, acquisitions, sale-leaseback transactions and sales of assets, (v) make distributions and other restricted payments, (vi) change the nature of its business, (vii) engage in transactions with affiliates and (viii) enter into restrictive agreements, including agreements that restrict the ability to incur liens or make distributions.

In addition, the Amended Credit Agreement requires the Company to maintain a minimum specified fixed charge coverage ratio on a springing basis if minimum availability requirements as specified in the Amended Credit Agreement are not maintained.

The Amended Credit Agreement contains certain customary events of default. If any event of default occurs and is continuing, the Lenders would be entitled to take various actions, including the acceleration of amounts due under the Amended Credit Agreement, and exercise other rights and remedies.

As of September 30, 2026, the amount available under the Amended Credit Agreement was$290.1 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.

Interest (Income) Expense, net

The following table provides the components of interest expense, net for thethree and nine months ended September 30, 2026 and 2025:

For the nine months ended September 30, 2026, interest expense included a partial write-off of debt issuance costs of $0.1 million related to the refinancing of the Amended Credit Agreement.

Interest income primarily relates to interest earned on cash invested in a money market fund and deposits with financial institutions. As of September 30, 2026, the carrying value of the Company's money market investmentwas $24.7 million, which approximatesthe fair value. The Company had $51.6 million in cash invested in a money market fund as of September 30, 2025. 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, 2026 and 2025, the Company has $67.6 and $96.3 million, respectively, of cash held in other accounts which generate interest income at a rate similar to the money market fund.

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, 2026, the Company repurchased approximately 0.2 million common shares in the open market at an aggregate cost of $3.6 million, which equates to an average repurchase price of $19.38 per share. For thenine months ended September 30, 2026, the Company repurchased approximately 0.7 million common shares in the open market at an aggregate cost of $11.5 million, which equates to an average repurchase price of $17.56 per share. As of September 30, 2026, the Company had a balance of $78.2 million remaining on its authorized share repurchase program.

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 the nine 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.

In October 2026, the Company repurchased approximately 0.1 million common shares at an aggregate cost of $1.2 million, which equates to an average repurchase price of $20.27 per share. As of October 31,2026, the Company had a balance of $77.0 million remaining under its authorized share repurchase program.

Note 12 – Retirement and Postretirement Plans

The Bargaining Plan and Supplemental 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.

Plan Amendments and Updates

Bargaining Plan

On February 5, 2026, the United Steelworkers (“USW”) Local 1123 voted to ratify a new four-year contract (the “Contract”). The Contract, which is in effect until September 30, 2029, offers Metallus’ bargaining employees an increase to base wages every year, competitive healthcare and retirement benefits for all members, and has a continued focus on employee wellbeing as well as safe and sustainable operations. The Contract covers approximately 1,200 bargaining employees at the Company’s Canton, Ohio operations.

The Contract ratification resulted in several changes to the Bargaining Plan, including the option for eligible employees to freeze their pension accrual in exchange for an opportunity to elect an in-service lump sum distribution of their pension benefit at age 59 1/2. These changes required a remeasurement of the Bargaining Plan's pension obligations and plan assets during the first quarter of 2026. A gain of $2.5 million was recognized for the three months ended March 31, 2026, primarily driven by investment gains on plan assets and a decrease in the net pension liability as a result of an increase in the discount rate.

The remeasurement incorporated various assumptions used by the Company’s actuaries in calculating pension obligations and plan assets. These assumptions include discount rates, the expected return on plan assets, and estimates of the number of eligible employees expected to elect an in‑service lump‑sum distribution. Actual results differing from these assumptions, as well as changes in assumptions, could affect future pension expense and obligations.

Additionally, during the third quarter of 2026, the cumulative cost of all lump sum payments was expected to exceed the annual sum of the service cost and interest cost components of net periodic pension cost for the Bargaining Plan. As a result, the Company completed a full remeasurement of its pension obligations and plan assets associated with the Bargaining Plan as of September 30, 2026.

A net gain of $15.7 million from the remeasurement of the Bargaining Plan was recognized for the three months ended September 30, 2026. This gain was attributable to a $42.1 million decrease in the liability due to an increase in the discount rate, partially offset by $26.4 million of investment losses on plan assets and lump sum basis losses. A total gain of $18.2 million has been recognized related to the remeasurement of the Bargaining Plan for the nine months ended September 30, 2026.

The Company also contributed a total of $25.2 million to its pension plans during the nine months ended September 30, 2026. The Company doesnot anticipate additional pension contributions for the remainder of 2026. 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. 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, 2026 were as follows:

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

The components of net periodic benefit cost (income) for the nine months ended September 30, 2026 were as follows:

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

Note 13 – Stock-Based Compensation

During the nine months ended September 30, 2026 the Board of Directors granted 481,020 time-based restricted stock units and 308,000 performance-based restricted stock units, which primarily relates to the annual grant to our employees and Board of Directors. 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 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, 2026 was $18.03 per share.

Performance-based restricted stock units issued in 2026 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, 2026 was $17.21 per share.

Metallus recognized stock-based compensation expense of $3.6 million and $10.2 million for thethree and nine months ended September 30, 2026, compared to $3.8 million and $10.9 million for thethree and nine months ended September 30, 2025. Future stock-based compensation expense related to the unvested portion of all awards is approximately $19.4 million. The future expense is expected to be recognized over the remaining vesting periods through 2029.

Note 14 – Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) for thenine months ended September 30, 2026 and 2025 by component were as follows:

The amount reclassified from accumulated other comprehensive income (loss) in the nine months ended September 30, 2026 and 2025 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.