Metallus Inc. Q3 FY2025 earnings call

• Safety: Spending $5 million on safety management systems and equipment, 0 serious injuries in 2025, 15% reduction in days away and restorative work cases, 34% reduction in lost and restricted work days y-o-y. Faircrest facility annual maintenance shutdown completed without serious incidents. • Customer Feedback: Over 97% of respondents would recommend Metallus products, most prefer U.S.-made steel, new customers added, order backlog increased. • Business Results: Sales increased due to favorable product mix, adjusted EBITDA rose sequentially. • End Markets: Industrial shipments slight decrease, automotive shipments slight increase, energy shipments reduced volumes but capturing more share, aerospace and defense backlog up, growing participation in VAR steel. • Labor Negotiations: USW members didn't ratify tentative agreement, contract extended to Jan 29, 2026.

Third quarter net sales totaled $305.9 million, with adjusted EBITDA at $29 million, a sequential increase of 9%. Shipments in the third quarter improved by 36% year-over-year. Aerospace and defense backlog is up approximately 80% compared to a year ago. Industrial shipments decreased slightly sequentially, automotive shipments increased slightly, energy shipments remained at reduced volumes, while higher shipments in aerospace and defense contributed to a favorable product mix. Net income was $8.1 million in the third quarter or $0.19 per diluted share, and on an adjusted basis, net income was $12 million or $0.28 per diluted share.

• Fourth quarter shipments expected 5%-10% lower than Q3 due to seasonality and supply chain challenges. • Base price per ton anticipated to increase slightly due to 5% bar and 2 price increases. • Product mix less favorable than Q3. • Adjusted EBITDA expected to have a $2 million-$3 million sequential headwind. • Fourth quarter shutdown maintenance ~$11 million, a sequential increase, leading to decrease in melt utilization and fixed cost leverage.

• Labor negotiations outcome could lead to additional labor and benefit costs. • Global supply chain challenges may impact shipments. • Tariffs could affect customers' purchasing decisions and input material costs. • Energy price fluctuations, particularly electrical energy costs.

Q: About automotive business, regaining domestic share and global supply chain challenges?

A: Automotive up y-o-y, SUVs/trucks selling well, some supply chain concerns like Ford related to chips.

Q: Impact of tariffs on customers?

A: Tariffs favorable for new customers, no A&D impact as national security is priority.

Q: Global supply chain challenges context?

A: Concerns over chip supply, Ford being a notable example.

Q: Labor negotiations cost incurrence in Q3?

A: Barely nothing except negotiation costs, more to come.

Q: Energy end market volume rebound in 2026?

A: Driven by oil price, sanctions, LNG plants, tariffs affecting energy end market inquiries.

Q: Order book tracking vs last year?

A: Strong on pace to meet 70% booking goal, customers' production forecasts up.

Q: Energy input prices negotiation status?

A: Electrical energy contract expired, market prices changed, 2-year agreement for most, natural gas purchased forward.

Q: CapEx spend and 2026 outlook?

A: 2025 CapEx dropped due to timing, 2026 in planning phases.

Q: Third party floor operations progress?

A: Pleased with progress, benefits realized in 2026.

Q: New A&D awards and revenue recognition?

A: VAR VIM sales growing, munitions demand building, new programs awarded, revenue to materialize in 2026.