Metallus Inc. Q2 FY2025 earnings call

• Welcomed John Zaranec as new Executive Vice President and Chief Financial Officer. Kris assumed new responsibilities as President and Chief Operating Officer. • Trade environment: Section 232 steel tariffs remain at 50% for most countries. • Safety: On track to invest $5M in safety systems, 2025 has 0 serious injuries, 40% reduction in injury severity, 6% reduction in injury frequency. • Business results: Shipments up 10% QoQ, second quarter net sales $304.6M, adjusted EBITDA $26.5M. Market segments: Industrial shipments slight QoQ increase, energy up 17% QoQ, automotive up 9% QoQ, aerospace/defense nearly doubled QoQ. VAR sales year-to-date doubled. • Operations: Melt utilization rate improved to 71%, launched initiative to optimize manufacturing operating system. Capital investments: Automatic grinding line operational, bloom reheat furnace construction on schedule, labor negotiations with USW start Aug 18.

Second quarter net sales totaled $304.6 million, a sequential increase of $24.1 million or 9%. Adjusted EBITDA was $26.5 million in the second quarter, a sequential increase of 50%. Net income was $3.7 million in the second quarter or $0.09 per diluted share. On an adjusted basis, net income was $8.4 million or $0.20 per diluted share. Shipments increased by 10% compared with the first quarter, driven by higher aerospace and defense, automotive and energy shipments. Year-to-date, VAR-related sales have more than doubled compared to the first half of 2024.

• Third quarter shipments expected similar to second quarter, lead times extend to October. • Base price per ton steady in third quarter, $100 per ton spot price increase on seamless mechanical tubing effective Nov 1. • Melt utilization expected to increase QoQ. • Planned annual shutdown maintenance $15M, $5M in Q3 for non-melt shop assets, $10M in Q4 including melt shop. • Higher electricity costs start Q3. • Incremental labor agreement negotiation costs $3M-$5M in second half 2025. • Expect $10M annual savings from process optimization initiative, ramping up in first half 2026.

• Labor negotiations with USW could impact operations. • Uncertainty around trade agreements and their impact on demand. • Supply chain challenges in aerospace and defense sector. • Increase in electricity costs starting Q3.

Q: Can you talk about new market share gains and increased bidding due to tariff environment?

A: Majority share gain was regaining lost industrial and automotive business; modest increase in new customer inquiries tied to tariffs but waiting for agreements.

Q: Thoughts on supply chain issues in A&D and when resolved?

A: Things starting to improve, expect additional orders in Q4 2025.

Q: SBQ bar price increases and impact on 2026 contract discussions?

A: No recent price increases; contract discussions to pick up late Sep to early Dec.

Q: Planned downtime and technology implementation?

A: Majority maintenance, some technology upgrades; focus on shop floor execution optimization for $10M savings in 2026.

Q: Texture of order book and price mix?

A: Order book double size of year ago, defense and automotive stable, expect modest price appreciation as prior increases work through shipments.