Metallus Inc. Q4 FY2024 earnings call

Safety

• Strengthened safety management system in 2024, with OSHA total recordable injury rate declining 7%, corrective action completion rate improving 15%, near miss reporting up 36%, and proactive observations up 60%. Invested ~$8M in 2024 and plans to invest ~$5M in 2025.

Trade Environment

• President Trump's tariff on steel products to take effect March 12, 2025, expected to level the playing field, reduce imports, and boost domestic demand. Saw increased customer engagement due to trade environment.

Fourth Quarter Results

• Net sales up 6% sequentially driven by higher shipments and strength in aerospace and defense. Consolidated shipments up 9% sequentially, driven by aerospace and defense, energy, and automotive activity.

Energy Programs

• Launched new programs for energy customers, targeting $20M in annual sales from 2026, including work with offshore well design engineers and petrochemical companies.

Customer Contracts

• Wrapped up calendar year customer price agreement negotiations covering ~70% of 2025 order book; average base price per ton for covered customers expected to decrease low to mid-single digits in 2025.

CapEx

• 2024 CapEx totaled $64.3M, with 2025 target ~$125M, including ~$90M government funding for projects like the new Bloom Reheat furnace and roller furnace.

Fourth quarter net sales totaled $240.5 million, a sequential increase of 6% primarily driven by higher shipments. Consolidated shipments increased 9% sequentially. Aerospace and defense was a bright spot in 2024, with sales increasing 17% to nearly $135 million, representing 12% of total sales. Shipments to industrial customers declined 6% sequentially, but order activity is increasing. Shipments to energy customers increased 78% sequentially from a low base, and automotive shipments increased 3% sequentially. Net sales for the full year aren't explicitly stated for segments, but key is the strong performance in aerospace and defense.

First Quarter

• Adjusted EBITDA expected higher than fourth quarter. Shipments expected to increase sequentially, particularly in industrial end market. Sequentially unfavorable price mix in first quarter due to customer price agreements and spot pricing. Melt utilization expected to increase to ~70% in first quarter.

Pension Contributions

• Estimated required pension contributions in 2025 ~$65M, heavily weighted to first quarter.

CapEx

• CapEx target ~$125M in 2025, more weighted to second half of the year.

• Market demand uncertainties affecting financial performance. - Trade environment uncertainties related to tariff implementation and its impact on domestic demand. - Pension funding requirements and their potential impact on cash flow.

Q: John Franzreb asks about demand profile in Q4 and Q1, attributing to rebalancing and trade environment.

A: Mike Williams states the order book is healthy, driven by recapture of automotive business, distribution restocking, industrial base activity, and anticipation of the trade environment.

Q: Dave Storms asks about seasonality in 2025, lead times, and auto end market.

A: Mike and Kris discuss restocking as a factor, aerospace and defense ramping throughout the year, lead times normal, and auto target 40% of shipments due to industrial demand.

Q: Phil Gibbs asks about Q1 bridge, price mix, pension contributions, and automotive.

A: Mike explains price mix driven by product mix, pension contributions ~$65M weighted to Q1, and automotive demand modest.