Metallus Inc 10-Q for FY2026 Q3
Metallus Inc. (MTUS)
About this 10-Q
Metallus Inc filed this 10-Q on November 3, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Metallus reported nine-month net sales of $986.5 million, up 10.7% from 2025 on favorable surcharges, higher shipment volume and improved price/mix. It also won a five-year U.S. Defense Logistics Agency specialty steel contract with maximum potential value of $995.0 million. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $337.2M
- up 10.2% from $305.9M a year earlier
- Net income
- $23.8M
- up 193.8% from net income of $8.1M a year earlier
- Diluted EPS
- $0.55
- up 189.5% from $0.19 a year earlier
fa
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial reporting accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Outstanding at October 31, 2026 |
Common Shares, without par value |
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Metallus Inc.
Table of Contents
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Page |
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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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2
Part I. Financial Information
Item 1. Financial Statements
Metallus Inc.
Consolidated Statements of Operations (Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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(Dollars in millions, except per share data) |
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Net sales |
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Cost of products sold |
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Gross Profit |
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Selling, general and administrative expenses |
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Restructuring charges |
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Loss (gain) on sale or disposal of assets, net |
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Interest (income) expense, net |
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Loss on extinguishment of debt |
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Other (income) expense, net |
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Income (Loss) Before Income Taxes |
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Provision (benefit) for income taxes |
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Net Income (Loss) |
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$ |
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$ |
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$ |
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Per Share Data: |
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Basic earnings (loss) per share |
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$ |
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$ |
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Diluted earnings (loss) per share |
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$ |
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$ |
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$ |
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See accompanying Notes to the unaudited Consolidated Financial Statements.
3
Metallus Inc.
Consolidated Statement of Comprehensive Income (Loss) (Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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(Dollars in millions) |
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Net income (loss) |
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$ |
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$ |
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$ |
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Other comprehensive income (loss), net of benefit (provision) for income taxes of $ |
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Foreign currency translation adjustments |
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Pension and postretirement liability adjustments |
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Other comprehensive income (loss), net of tax |
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Comprehensive Income (Loss), net of tax |
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$ |
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$ |
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$ |
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$ |
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See accompanying Notes to the unaudited Consolidated Financial Statements.
4
Metallus Inc.
Consolidated Balance Sheets (Unaudited)
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September 30, |
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December 31, |
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(Dollars in millions) |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowances (2026 - $ |
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Inventories, net |
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Deferred charges and prepaid expenses |
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Other current assets |
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Total Current Assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Finance lease right-of-use assets |
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Pension assets |
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Intangible assets, net |
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Other non-current assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable |
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$ |
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$ |
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Salaries, wages and benefits |
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Accrued pension and postretirement costs |
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Current operating lease liabilities |
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Current finance lease liabilities |
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Government funding liabilities |
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Other current liabilities |
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Total Current Liabilities |
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Credit Agreement |
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Non-current operating lease liabilities |
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Non-current finance lease liabilities |
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Accrued pension and postretirement costs |
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Deferred income taxes |
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Other non-current liabilities |
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Total Liabilities |
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Shareholders’ Equity |
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Preferred shares, without par value; authorized |
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Common shares, without par value; authorized |
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Additional paid-in capital |
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Retained deficit |
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( |
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Treasury shares - 2026 - |
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( |
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( |
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Accumulated other comprehensive income (loss) |
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Total Shareholders’ Equity |
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Total Liabilities and Shareholders’ Equity |
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$ |
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$ |
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See accompanying Notes to the unaudited Consolidated Financial Statements.
5
Metallus Inc.
(Dollars in millions) |
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Common |
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Additional |
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Retained |
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Treasury |
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Accumulated |
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Total |
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Balance As of December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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— |
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( |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Stock option activity |
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— |
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— |
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— |
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Purchase of treasury shares, including excise tax |
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( |
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— |
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— |
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( |
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— |
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( |
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Issuance of treasury shares |
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( |
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— |
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— |
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— |
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Shares surrendered for taxes |
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( |
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— |
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— |
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( |
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— |
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( |
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Balance As of March 31, 2026 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Purchase of treasury shares, including excise tax |
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( |
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— |
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— |
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( |
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— |
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( |
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Issuance of treasury shares |
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( |
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— |
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— |
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Shares surrendered for taxes |
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( |
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— |
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— |
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— |
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— |
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Balance As of June 30, 2026 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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— |
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( |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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Purchase of treasury shares, including excise tax |
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( |
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— |
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— |
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( |
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— |
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( |
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Issuance of treasury shares |
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— |
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Shares surrendered for taxes |
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Balance As of September 30, 2026 |
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$ |
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$ |
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$ |
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$ |
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$ |
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6
(Dollars in millions) |
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Common |
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Additional |
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Retained |
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Treasury |
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Accumulated |
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Total |
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Balance As of December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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— |
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( |
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Stock-based compensation expense |
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— |
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Purchase of treasury shares, including excise tax |
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— |
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— |
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— |
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Issuance of treasury shares |
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— |
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Shares surrendered for taxes |
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— |
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— |
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Balance As of March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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— |
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( |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Purchase of treasury shares, including excise tax |
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( |
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— |
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— |
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( |
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— |
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( |
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Issuance of treasury shares |
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— |
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Balance As of June 30, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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— |
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( |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Purchase of treasury shares, including excise tax |
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( |
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— |
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— |
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( |
) |
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— |
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( |
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Issuance of treasury shares |
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— |
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— |
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— |
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— |
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— |
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Shares surrendered for taxes |
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( |
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— |
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— |
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— |
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— |
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— |
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Balance As of September 30, 2025 |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
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See accompanying Notes to the unaudited Consolidated Financial Statements.
7
Metallus Inc.
Consolidated Statements of Cash Flows (Unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
(Dollars in millions) |
|
|
|
|
|
|
||
CASH PROVIDED (USED) |
|
|
|
|
|
|
||
Operating Activities |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of deferred financing fees |
|
|
|
|
|
|
||
Loss on extinguishment of debt |
|
|
|
|
|
|
||
Loss (gain) on sale or disposal of assets, net |
|
|
|
|
|
( |
) |
|
Deferred income taxes |
|
|
|
|
|
|
||
Stock-based compensation expense |
|
|
|
|
|
|
||
Pension and postretirement (benefit) expense, net |
|
|
( |
) |
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
( |
) |
|
|
( |
) |
Inventories, net |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
|
||
Other accrued expenses |
|
|
|
|
|
|
||
Deferred charges and prepaid expenses |
|
|
|
|
|
|
||
Pension and postretirement contributions and payments |
|
|
( |
) |
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
|
|
Net Cash Provided (Used) by Operating Activities |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Investing Activities |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Proceeds from government funding |
|
|
|
|
|
|
||
Proceeds from disposals of property, plant and equipment |
|
|
|
|
|
|
||
Net Cash Provided (Used) by Investing Activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Financing Activities |
|
|
|
|
|
|
||
Purchase of treasury shares |
|
|
( |
) |
|
|
( |
) |
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Shares surrendered for employee taxes on stock compensation |
|
|
( |
) |
|
|
( |
) |
Debt issuance costs |
|
|
( |
) |
|
|
|
|
Repayments on convertible notes |
|
|
|
|
|
( |
) |
|
Other financing activities |
|
|
( |
) |
|
|
|
|
Net Cash Provided (Used) by Financing Activities |
|
|
( |
) |
|
|
( |
) |
Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash |
|
|
( |
) |
|
|
( |
) |
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, Cash Equivalents, and Restricted Cash at End of Period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows: |
|
|||||||
|
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash reported in other current assets |
|
|
|
|
|
|
||
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows |
|
$ |
|
|
$ |
|
||
See accompanying Notes to the unaudited Consolidated Financial Statements.
8
Metallus Inc.
Notes to Unaudited Consolidated Financial Statements
(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:
Standard Adopted |
|
Description |
|
Effective Date |
|
Impact |
ASU 2024-03, Disaggregated Expenses |
|
|
Annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. |
|
The Company is currently evaluating the impact of the |
Note 3 – Segment Reporting
We conduct our business activities and report financial results as
Note 4 – Government Funding
On February 27, 2024, the Company entered into an agreement with the United States Army ("U.S. Army"). The agreement provides for $
9
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 $
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 the three and nine months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Industrial |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Automotive |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Aerospace & Defense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Energy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(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:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Bar |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Tube |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Manufactured components |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(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 $
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.
Balance at December 31, 2025 |
|
$ |
|
|
Expenses |
|
|
|
|
Payments |
|
|
( |
) |
Balance at September 30, 2026 |
|
$ |
|
10
Note 7 – Other (Income) Expense, net
The following table provides the components of other (income) expense, net for the three and nine months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Pension and postretirement non-service benefit (income) loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(Gain) loss from remeasurement of benefit plans |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Sales and use tax refund |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
(Gain) on negotiated vendor obligation |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Miscellaneous (income) expense |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Total other (income) expense, net |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
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 $
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.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Provision (benefit) for incomes taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Effective tax rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
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
The effective tax rate for the nine months ended September 30, 2026 and 2025 was
For the nine months ended September 30, 2026, Metallus made
For the nine months ended September 30, 2026, Metallus received $
11
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
Common share equivalents for shares issuable for equity-based awards amounted to
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.
12
The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss), basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Add convertible notes interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss), diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding, basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of stock-based awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of convertible notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding, diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings (loss) per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted earnings (loss) per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 10 – Inventories
The components of inventories, net of reserves as of September 30, 2026 and December 31, 2025 were as follows:
|
|
September 30, |
|
|
December 31, |
|
||
Manufacturing supplies |
|
$ |
|
|
$ |
|
||
Raw materials |
|
|
|
|
|
|
||
Work in process |
|
|
|
|
|
|
||
Finished products |
|
|
|
|
|
|
||
Gross inventory |
|
|
|
|
|
|
||
Allowance for inventory reserves |
|
|
( |
) |
|
|
( |
) |
Total inventories, net |
|
$ |
|
|
$ |
|
||
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 $
13
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
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
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 $
Interest (Income) Expense, net
The following table provides the components of interest expense, net for the three and nine months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest (income) expense, net |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
For the nine months ended September 30, 2026, interest expense included a partial write-off of debt issuance costs of $
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 investment was $
14
approximates the fair value. The Company had $
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 $
For the three months ended September 30, 2026, the Company repurchased approximately
For the three months ended September 30, 2025, the Company repurchased approximately
In October 2026, the Company repurchased approximately
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
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 $
15
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 $
The Company also contributed a total of $
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
Pension Net Periodic Benefit Cost (Income)
The components of net periodic benefit cost (income) for the three months ended September 30, 2026 were as follows:
|
|
Pension |
|
|
|
|
|
|
|
|||||||||||
|
|
United States of America |
|
|
Foreign |
|
|
|
|
|
|
|
||||||||
|
|
Bargaining |
|
|
Supplemental |
|
|
Pension |
|
|
Total |
|
|
Postretirement |
|
|||||
Service cost |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Expected return on plan assets |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service cost |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
Net remeasurement (gains) losses |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Net Periodic Benefit Cost (Income) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
16
The components of net periodic benefit cost (income) for the three months ended September 30, 2025 were as follows:
|
|
Pension |
|
|
|
|
|
|
|
|||||||||||
|
|
United States of America |
|
|
Foreign |
|
|
|
|
|
|
|
||||||||
|
|
Bargaining |
|
|
Supplemental |
|
|
Pension |
|
|
Total |
|
|
Postretirement |
|
|||||
Service cost |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Expected return on plan assets |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service cost |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
Net Periodic Benefit Cost (Income) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||
The components of net periodic benefit cost (income) for the nine months ended September 30, 2026 were as follows:
|
|
Pension |
|
|
|
|
|
|
|
|||||||||||
|
|
United States of America |
|
|
Foreign |
|
|
|
|
|
|
|
||||||||
|
|
Bargaining |
|
|
Supplemental |
|
|
Pension |
|
|
Total |
|
|
Postretirement |
|
|||||
Service cost |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Expected return on plan assets |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service cost |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
Net remeasurement losses (gains) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Net Periodic Benefit Cost (Income) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
The components of net periodic benefit cost (income) for the nine months ended September 30, 2025 were as follows:
|
|
Pension |
|
|
|
|
|
|
|
|||||||||||
|
|
United States of America |
|
|
Foreign |
|
|
|
|
|
|
|
||||||||
|
|
Bargaining |
|
|
Supplemental |
|
|
Pension |
|
|
Total |
|
|
Postretirement |
|
|||||
Service cost |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Expected return on plan assets |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service cost |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
Net Periodic Benefit Cost (Income) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||
Note 13 – Stock-Based Compensation
During the nine months ended September 30, 2026 the Board of Directors granted
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 $
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,
17
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 $
Note 14 – Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) for the nine months ended September 30, 2026 and 2025 by component were as follows:
|
|
Foreign Currency |
|
|
Pension and |
|
|
Total |
|
|||
Balance as of December 31, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Other comprehensive income (loss) before reclassifications, before income tax |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Amounts reclassified from accumulated other comprehensive income (loss), before income tax |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Amounts deferred to accumulated other comprehensive income (loss), before income tax |
|
|
|
|
|
|
|
|
|
|||
Tax effect |
|
|
|
|
|
|
|
|
|
|||
Net current period other comprehensive income (loss), net of income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance as of September 30, 2026 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|||
|
|
Foreign Currency |
|
|
Pension and |
|
|
Total |
|
|||
Balance as of December 31, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Other comprehensive income (loss) before reclassifications, before income tax |
|
|
|
|
|
|
|
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss), before income tax |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Amounts deferred to accumulated other comprehensive income (loss), before income tax |
|
|
|
|
|
|
|
|
|
|||
Tax effect |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net current period other comprehensive income (loss), net of income taxes |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance as of September 30, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
18
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.
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollars in millions, except per share data)
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help investors understand our results of operations, financial condition and current business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2026.
The MD&A is organized as follows:
Overview
Business Overview
We manufacture alloy steel, as well as carbon and micro-alloy steel, using electric arc furnace ("EAF") technology. Our portfolio includes special bar quality (“SBQ”) bars, seamless mechanical tubing (“tubes”), manufactured components such as precision steel components, and billets. Our products and solutions are used in a diverse range of demanding applications in the following end-markets: industrial, automotive, aerospace & defense, and energy.
We conduct our business activities and report financial results as one business segment. The presentation of financial results as one reportable segment is consistent with the way we operate our 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. 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 our operations.
Business Highlights
The following items represent key trends and events during the three and nine months ended September 30, 2026:
20
(1) Please see discussion of non-GAAP financial measures in Form 10-Q – Net Sales, Excluding Surcharges.
21
Results of Operations
Net Sales
The charts below present net sales and shipments for the three months ended September 30, 2026 and 2025.
Net sales for the three months ended September 30, 2026 were $337.2 million, an increase of $31.3 million, or 10.2% compared with the three months ended September 30, 2025. The increase in net sales was driven by favorable surcharges, improved price/mix, and higher shipment volume. The increase in surcharges of $13.5 million was primarily a result of higher alloy and scrap market prices, as well as energy surcharges. Favorable price/mix of $11.2 million was primarily due to higher aerospace & defense shipments and increased base prices across all end markets, except automotive. Higher shipment volume of 2.7 thousand ship tons resulted in a net sales increase of $6.6 million. Excluding surcharges, net sales increased $17.8 million or 7.4%.
The charts below present net sales and shipments for the nine months ended September 30, 2026 and 2025.
Net sales for the nine months ended September 30, 2026 were $986.5 million, an increase of $95.5 million, or 10.7% compared with the nine months ended September 30, 2025. The increase in net sales was driven by favorable surcharges, higher shipment volume, and improved price/mix. Higher surcharge per ton resulted in a net sales increase of $37.9 million. Higher shipment volume of 20.1 thousand ship tons, resulted in a net sales increase of $35.4 million. Favorable price/mix of $22.2 million was driven by higher aerospace & defense shipments and increased base prices, primarily within the industrial end market. Excluding surcharges, net sales increased $57.6 million or 8.2%.
22
Gross Profit
The chart below presents the drivers of the gross profit variance from the three months ended September 30, 2025 as compared to the three months ended September 30, 2026.
Gross profit for the three months ended September 30, 2026 increased $1.3 million, or 3.7% compared with the three months ended September 30, 2025. The increase was driven by favorable price/mix, partially offset by higher manufacturing costs and unfavorable raw material spread. Favorable price/mix was due to higher aerospace & defense shipments and improved base prices, particularly in the industrial end market. Manufacturing performance was unfavorably impacted by higher maintenance costs associated with improving downstream asset reliability and higher energy rates, as well as planned shutdown costs and an increase in power curtailments, partially offset by improved fixed-cost absorption from higher production volumes. Raw material spread was unfavorable due to lower scrap spread, partially offset by higher alloy spread.
23
The chart below presents the drivers of the gross profit variance from the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2026.
Gross profit for the nine months ended September 30, 2026 increased $6.4 million, or 7.2% compared with the nine months ended September 30, 2025. The increase was driven by favorable price/mix and higher shipment volume, partially offset by higher manufacturing costs and unfavorable raw material spread. Favorable price/mix was due to higher aerospace & defense shipments and improved base prices, particularly in the industrial end market. Higher aerospace & defense and automotive shipments were partially offset by slightly lower shipments to energy and industrial end markets. Manufacturing performance was unfavorably impacted by higher maintenance costs associated with improving downstream asset reliability and higher energy rates, as well as planned shutdown costs and an increase in power curtailments, partially offset by improved fixed-cost absorption from higher production volumes. Raw material spread was unfavorable due to lower scrap spread, mostly offset by higher alloy spread and the impact of higher volume.
24
Selling, General and Administrative Expenses
The charts below present selling, general and administrative (“SG&A”) expense for the three and nine months ended September 30, 2026 and 2025.
SG&A expense for the three months ended September 30, 2026 decreased by $0.7 million, or 2.9% compared with the three months ended September 30, 2025. SG&A expense for the nine months ended September 30, 2026 decreased by $2.0 million, or 2.8% compared with the nine months ended September 30, 2025. The decrease was primarily due to lower professional services, partially offset by slightly higher salary and benefits and variable pay compensation.
25
Interest (Income) Expense, net
Net interest income for the three and nine months ended September 30, 2026 was $0.3 million and $0.8 million, respectively, compared with net interest income of $1.4 million and $4.2 million for the three and nine months ended September 30, 2025, respectively. The decline in net interest income was primarily due to a combination of lower interest rates and lower average cash balances in 2026 compared to 2025. Additionally, for the nine months ended September 30, 2026, net interest income included a partial write-off of debt issuance costs of $0.1 million related to the refinancing of the Amended Credit Agreement. Refer to “Note 11 - Financing Arrangements” in the Notes to the unaudited Consolidated Financial Statements for additional information.
Other (Income) Expense, net
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|||
Pension and postretirement non-service benefit (income) loss |
|
$ |
(2.0 |
) |
|
$ |
(1.5 |
) |
|
$ |
(0.5 |
) |
(Gain) loss from remeasurement benefit plans |
|
|
(15.7 |
) |
|
|
— |
|
|
|
(15.7 |
) |
Sales and use tax refund |
|
|
— |
|
|
|
(0.3 |
) |
|
|
0.3 |
|
(Gain) on negotiated vendor obligation |
|
|
(2.0 |
) |
|
|
— |
|
|
|
(2.0 |
) |
Miscellaneous (income) expense |
|
|
— |
|
|
|
(0.1 |
) |
|
|
0.1 |
|
Total other (income) expense, net |
|
$ |
(19.7 |
) |
|
$ |
(1.9 |
) |
|
$ |
(17.8 |
) |
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|||
Pension and postretirement non-service benefit (income) loss |
|
$ |
(5.6 |
) |
|
$ |
(4.4 |
) |
|
$ |
(1.2 |
) |
(Gain) loss from remeasurement of benefit plans |
|
|
(18.2 |
) |
|
|
— |
|
|
|
(18.2 |
) |
Sales and use tax refund |
|
|
— |
|
|
|
(1.1 |
) |
|
|
1.1 |
|
(Gain) on negotiated vendor obligation |
|
|
(2.0 |
) |
|
|
— |
|
|
|
(2.0 |
) |
Miscellaneous (income) expense |
|
|
(0.2 |
) |
|
|
(0.3 |
) |
|
|
0.1 |
|
Total other (income) expense, net |
|
$ |
(26.0 |
) |
|
$ |
(5.8 |
) |
|
$ |
(20.2 |
) |
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 remeasurement, 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.
Provision for Income Taxes
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|||
Provision (benefit) for income taxes |
|
$ |
8.5 |
|
|
$ |
2.8 |
|
|
$ |
5.7 |
|
Effective tax rate |
|
|
26.3 |
% |
|
|
25.7 |
% |
|
|
0.6 |
% |
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|||
Provision (benefit) for income taxes |
|
$ |
14.1 |
|
|
$ |
9.3 |
|
|
$ |
4.8 |
|
Effective tax rate |
|
|
27.0 |
% |
|
|
41.5 |
% |
|
|
(14.5 |
)% |
The provision for income taxes for the three and nine months ended September 30, 2026 was $8.5 million and $14.1 million compared to a provision for income taxes of $2.8 million and $9.3 million for similar periods in 2025. The effective tax rate for the three months ended September 30, 2026 remained relatively consistent year over year. The decrease in the effective tax rate for the nine months ended September 30, 2026 is primarily related to higher pre-tax income and the limitations of the tax deductibility of the loss on extinguishment of debt on the Convertible Senior Notes in the prior year.
26
Non-GAAP Financial Measures
Net Sales, Excluding Surcharges
The tables below present net sales by end-markets, adjusted to exclude surcharges, which represents a financial measure that has not been determined in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). We believe presenting net sales by end-markets, both on a gross basis and on a per ton basis, adjusted to exclude raw material and energy surcharges, provides additional insight into key drivers of net sales such as base price and product mix. Due to the fact that the surcharge mechanism can introduce volatility to our net sales, net sales adjusted to exclude surcharges provides management and investors clarity of our core pricing and results. Presenting net sales by end-markets, adjusted to exclude surcharges including on a per ton basis, allows management and investors to better analyze key market indicators and trends and allows for enhanced comparison between our end-markets.
When surcharges are included in a customer agreement and are applicable (i.e., reach the threshold amount), based on the terms outlined in the respective agreement, surcharges are then included as separate line items on a customer’s invoice. These additional surcharge line items adjust base prices to match cost fluctuations due to market conditions. Each month, the Company will post on the surcharges page of its external website, as well as our customer portal, the scrap, alloy, and energy surcharges that will be applied (as a separate line item) to invoices dated in the following month (based upon shipment volumes in the following month). All surcharges invoiced are included in GAAP net sales.
(dollars in millions, ship tons in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended September 30, 2026 |
|
|||||||||||||||||||||
|
|
Industrial |
|
|
Automotive |
|
|
Aerospace & Defense |
|
|
Energy |
|
|
Other |
|
|
Total |
|
||||||
Ship Tons |
|
|
63.2 |
|
|
|
69.8 |
|
|
|
21.9 |
|
|
|
10.9 |
|
|
|
— |
|
|
|
165.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Sales |
|
$ |
115.1 |
|
|
$ |
123.6 |
|
|
$ |
66.4 |
|
|
$ |
25.4 |
|
|
$ |
6.7 |
|
|
$ |
337.2 |
|
Less: Surcharges |
|
|
33.9 |
|
|
|
27.4 |
|
|
|
9.0 |
|
|
|
7.2 |
|
|
|
— |
|
|
|
77.5 |
|
Base Sales |
|
$ |
81.2 |
|
|
$ |
96.2 |
|
|
$ |
57.4 |
|
|
$ |
18.2 |
|
|
$ |
6.7 |
|
|
$ |
259.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Sales / Ton |
|
$ |
1,821 |
|
|
$ |
1,771 |
|
|
$ |
3,032 |
|
|
$ |
2,330 |
|
|
$ |
— |
|
|
$ |
2,034 |
|
Surcharges / Ton |
|
$ |
536 |
|
|
$ |
393 |
|
|
$ |
411 |
|
|
$ |
661 |
|
|
$ |
— |
|
|
$ |
467 |
|
Base Sales / Ton |
|
$ |
1,285 |
|
|
$ |
1,378 |
|
|
$ |
2,621 |
|
|
$ |
1,669 |
|
|
$ |
— |
|
|
$ |
1,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended September 30, 2025 |
|
|||||||||||||||||||||
|
|
Industrial |
|
|
Automotive |
|
|
Aerospace & Defense |
|
|
Energy |
|
|
Other |
|
|
Total |
|
||||||
Ship Tons |
|
|
65.1 |
|
|
|
71.6 |
|
|
|
16.3 |
|
|
|
10.1 |
|
|
|
— |
|
|
|
163.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Sales |
|
$ |
106.7 |
|
|
$ |
125.9 |
|
|
$ |
47.2 |
|
|
$ |
21.6 |
|
|
$ |
4.5 |
|
|
$ |
305.9 |
|
Less: Surcharges |
|
|
28.2 |
|
|
|
25.1 |
|
|
|
5.7 |
|
|
|
5.0 |
|
|
|
— |
|
|
|
64.0 |
|
Base Sales |
|
$ |
78.5 |
|
|
$ |
100.8 |
|
|
$ |
41.5 |
|
|
$ |
16.6 |
|
|
$ |
4.5 |
|
|
$ |
241.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Sales / Ton |
|
$ |
1,639 |
|
|
$ |
1,758 |
|
|
$ |
2,896 |
|
|
$ |
2,139 |
|
|
$ |
— |
|
|
$ |
1,876 |
|
Surcharges / Ton |
|
$ |
433 |
|
|
$ |
351 |
|
|
$ |
350 |
|
|
$ |
495 |
|
|
$ |
— |
|
|
$ |
392 |
|
Base Sales / Ton |
|
$ |
1,206 |
|
|
$ |
1,407 |
|
|
$ |
2,546 |
|
|
$ |
1,644 |
|
|
$ |
— |
|
|
$ |
1,484 |
|
27
(dollars in millions, ship tons in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Nine Months Ended September 30, 2026 |
|
|||||||||||||||||||||
|
|
Industrial |
|
|
Automotive |
|
|
Aerospace & Defense |
|
|
Energy |
|
|
Other |
|
|
Total |
|
||||||
Ship Tons |
|
|
195.5 |
|
|
|
211.3 |
|
|
|
59.6 |
|
|
|
37.4 |
|
|
|
— |
|
|
|
503.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Sales |
|
$ |
343.5 |
|
|
$ |
364.4 |
|
|
$ |
178.4 |
|
|
$ |
82.4 |
|
|
$ |
17.8 |
|
|
$ |
986.5 |
|
Less: Surcharges |
|
|
99.1 |
|
|
|
79.6 |
|
|
|
25.6 |
|
|
|
22.8 |
|
|
|
— |
|
|
|
227.1 |
|
Base Sales |
|
$ |
244.4 |
|
|
$ |
284.8 |
|
|
$ |
152.8 |
|
|
$ |
59.6 |
|
|
$ |
17.8 |
|
|
$ |
759.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Sales / Ton |
|
$ |
1,757 |
|
|
$ |
1,725 |
|
|
$ |
2,993 |
|
|
$ |
2,203 |
|
|
$ |
— |
|
|
$ |
1,958 |
|
Surcharges / Ton |
|
$ |
507 |
|
|
$ |
377 |
|
|
$ |
430 |
|
|
$ |
610 |
|
|
$ |
— |
|
|
$ |
451 |
|
Base Sales / Ton |
|
$ |
1,250 |
|
|
$ |
1,348 |
|
|
$ |
2,563 |
|
|
$ |
1,593 |
|
|
$ |
— |
|
|
$ |
1,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended September 30, 2025 |
|
|||||||||||||||||||||
|
|
Industrial |
|
|
Automotive |
|
|
Aerospace & Defense |
|
|
Energy |
|
|
Other |
|
|
Total |
|
||||||
Ship Tons |
|
|
197.9 |
|
|
|
205.3 |
|
|
|
40.3 |
|
|
|
40.2 |
|
|
|
— |
|
|
|
483.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Sales |
|
$ |
312.8 |
|
|
$ |
361.9 |
|
|
$ |
121.8 |
|
|
$ |
81.1 |
|
|
$ |
13.4 |
|
|
$ |
891.0 |
|
Less: Surcharges |
|
|
83.4 |
|
|
|
71.5 |
|
|
|
14.8 |
|
|
|
19.5 |
|
|
|
— |
|
|
|
189.2 |
|
Base Sales |
|
$ |
229.4 |
|
|
$ |
290.4 |
|
|
$ |
107.0 |
|
|
$ |
61.6 |
|
|
$ |
13.4 |
|
|
$ |
701.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Sales / Ton |
|
$ |
1,581 |
|
|
$ |
1,763 |
|
|
$ |
3,022 |
|
|
$ |
2,017 |
|
|
$ |
— |
|
|
$ |
1,842 |
|
Surcharges / Ton |
|
$ |
421 |
|
|
$ |
348 |
|
|
$ |
367 |
|
|
$ |
485 |
|
|
$ |
— |
|
|
$ |
391 |
|
Base Sales / Ton |
|
$ |
1,160 |
|
|
$ |
1,415 |
|
|
$ |
2,655 |
|
|
$ |
1,532 |
|
|
$ |
— |
|
|
$ |
1,451 |
|
28
Liquidity and Capital Resources
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 extended the maturity date of the Credit Facility from September 2027 to June 2031. Following the amendment, the Credit Facility committed capacity was reduced to $300.0 million from $400.0 million. The Credit Facility remains undrawn as of September 30, 2026.
Refer to “Note 11 - Financing Arrangements” in the Notes to the unaudited Consolidated Financial Statements for additional information.
Additional Liquidity Considerations
The following represents a summary of key liquidity measures under the Amended Credit Agreement as of September 30, 2026 and December 31, 2025:
|
|
September 30, |
|
|
December 31, |
|
||
Cash and cash equivalents |
|
$ |
98.6 |
|
|
$ |
156.7 |
|
|
|
|
|
|
|
|
||
Credit Agreement: |
|
|
|
|
|
|
||
Maximum availability |
|
$ |
300.0 |
|
|
$ |
400.0 |
|
Suppressed availability(1) |
|
|
(4.7 |
) |
|
|
(162.2 |
) |
Availability |
|
|
295.3 |
|
|
|
237.8 |
|
Amount borrowed |
|
|
— |
|
|
|
— |
|
Letter of credit obligations |
|
|
(5.2 |
) |
|
|
(5.3 |
) |
Availability not borrowed |
|
$ |
290.1 |
|
|
$ |
232.5 |
|
|
|
|
|
|
|
|
||
Total liquidity |
|
$ |
388.7 |
|
|
$ |
389.2 |
|
(1) As of September 30, 2026, Metallus had less than $300.0 million in collateral assets to borrow against. As of December 31, 2025, Metallus had less than $400.0 million in collateral assets to borrow against.
Our principal sources of liquidity are cash and cash equivalents, cash flows from operations and available borrowing capacity under our Credit Agreement. As of September 30, 2026, taking into account our view of industrial, automotive, aerospace & defense and energy market demand for our products, and our 2026 operating and long-range plan, we believe that our cash balance as of September 30, 2026, projected cash generated from operations, and borrowings available under the Credit Agreement, will be sufficient to satisfy our working capital needs, capital expenditures and other liquidity requirements associated with our operations, including servicing our debt and pension and postretirement benefit obligations, for at least the next twelve months. We expect capital expenditures to be approximately $70 million in 2026, inclusive of approximately $35 million of capital expenditures substantially funded by the U.S. government.
For the nine months ended September 30, 2026, the Company contributed a total of $25.2 million in pension contributions, most of which related to the Bargaining Plan, and does not anticipate making any additional contributions during the remainder of 2026.
To the extent our liquidity needs prove to be greater than expected or cash generated from operations is less than anticipated, and cash on hand or credit availability is insufficient, we would seek additional financing to provide additional liquidity. We regularly evaluate our potential access to the equity and debt capital markets as sources of liquidity and we believe additional financing would likely be available if necessary, although we can make no assurance as to the form or terms of any such financing.
29
We continue to evaluate the best use of our liquidity which would allow us to invest in profitable growth, maintain a strong balance sheet, and return capital to shareholders.
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 the nine 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 under its share repurchase program. 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.
Cash Flows
The following table reflects the major categories of cash flows for the nine months ended September 30, 2026 and 2025. For additional details, please refer to the unaudited Consolidated Statements of Cash Flows included in this quarterly report.
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net cash provided (used) by operating activities |
|
$ |
(7.3 |
) |
|
$ |
17.9 |
|
Net cash provided (used) by investing activities |
|
|
(35.8 |
) |
|
|
(44.0 |
) |
Net cash provided (used) by financing activities |
|
|
(15.8 |
) |
|
|
(23.6 |
) |
Increase (Decrease) in Cash and Cash Equivalents |
|
$ |
(58.9 |
) |
|
$ |
(49.7 |
) |
Operating activities
Net cash used by operating activities for the nine months ended September 30, 2026 was $7.3 million compared to net cash provided of $17.9 million for the nine months ended September 30, 2025. The change was primarily driven by increased working capital use of cash in 2026 to support the growing order book, partially offset by higher profitability and lower required pension contributions.
Investing activities
Net cash used by investing activities for the nine months ended September 30, 2026 was $35.8 million compared to net cash used of $44.0 million for the nine months ended September 30, 2025. The change was due to lower capital expenditures and reduced proceeds from government funding in 2026 compared to the prior year.
Financing activities
Net cash used by financing activities for the nine months ended September 30, 2026 was $15.8 million compared to net cash used of $23.6 million for the nine months ended September 30, 2025. The change was primarily due to the repurchase of Convertible Notes during the second quarter of 2025 and lower repurchases of common shares in 2026, partially offset by debt issuance costs in 2026 with no similar costs in 2025.
30
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We review our critical accounting policies throughout the year.
New Accounting Guidance
See “Note 2 - Recent Accounting Pronouncements” in the Notes to the unaudited Consolidated Financial Statements.
Forward-Looking Statements
Certain statements set forth in this Quarterly Report on Form 10-Q (including our forecasts, beliefs and expectations) that are not historical in nature are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, Management’s Discussion and Analysis of Financial Condition and Results of Operations contains numerous forward-looking statements. Forward-looking statements generally will be accompanied by words such as “anticipate,” “aspire,” “believe,” “could,” “estimate,” “expect,” “forecast,” “outlook,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strategic direction,” “strategy,” “target,” “will,” “would,” or other similar words, phrases or expressions that convey the uncertainty of future events or outcomes. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Form 10-Q. We caution readers that actual results may differ materially from those expressed or implied in forward-looking statements made by or on behalf of us due to a variety of factors, such as:
31
You are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, and that the above list should not be considered to be a complete list. Except as required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Further, this report includes our current policy and intent and is not intended to create legal rights or obligations. Certain standards of measurement and performance contained in this report are developing and based on assumptions, and no assurance can be given that any plan, objective, initiative, projection, goal, mission, commitment, expectation, or prospect set forth in this report can or will be achieved. Inclusion of information in this report is not an indication that the subject or information is material to our business or operating results.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about market risk, see Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There were no material changes in our exposure to market risk since December 31, 2025.
32
Item 4. Controls and Procedures
(a) Disclosure Controls and Procedures
As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)). Based upon that evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.
(b) Changes in Internal Control Over Financial Reporting
During the Company’s most recent fiscal quarter, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
33
Part II. Other Information
Item 1. Legal Proceedings
We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of our management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Item 1A. Risk Factors
We are subject to various risks and uncertainties in the course of our business. The discussion of such risks and uncertainties may be found under Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The table below provides information concerning our repurchase of common shares for the three months ended September 30, 2026.
(Dollars in millions, except per share data) |
|
Total number of shares purchased (1) |
|
|
Average price paid per share (2) |
|
|
Total number of shares purchased as part of publicly announced plans or programs (1) |
|
|
Maximum dollar value of shares that may yet be purchased under the plans or programs (3) |
|
||||
Beginning shares available |
|
|
|
|
|
|
|
|
|
|
$ |
81.8 |
|
|||
July, 2026 |
|
|
52,706 |
|
|
$ |
18.33 |
|
|
|
52,706 |
|
|
$ |
80.8 |
|
August, 2026 |
|
|
55,739 |
|
|
$ |
20.72 |
|
|
|
55,739 |
|
|
$ |
79.7 |
|
September, 2026 |
|
|
78,546 |
|
|
$ |
19.14 |
|
|
|
78,546 |
|
|
$ |
78.2 |
|
Quarter-to-date |
|
|
186,991 |
|
|
$ |
19.38 |
|
|
|
186,991 |
|
|
$ |
78.2 |
|
Subsequent to September 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.
(1) The Company may utilize various methods to repurchase shares, which could include open market repurchases, including repurchases through Rule 10b5-1 plans, privately-negotiated transactions or by other means. The actual timing, number and value of shares repurchased under the program will depend on a number of factors, including the price of the Company's shares, general market and economic conditions, capital needs and other factors.
(2) The average price paid per share excludes any broker commissions.
(3) Since December 20, 2021, the Board of Directors has authorized the Company to repurchase up to $225 million of its outstanding common shares under its share repurchase program. The share repurchase program does not require the Company to acquire any dollar amount or numbers of shares and does not have an expiration date.
34
Item 6. Exhibits
Exhibit Number |
|
Exhibit Description |
|
|
|
31.1* |
|
|
|
|
|
31.2* |
|
|
|
|
|
32.1** |
|
|
|
|
|
101.INS* |
|
Inline XBRL Instance Document. |
|
|
|
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document. |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* Filed herewith.
** Furnished herewith.
35
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
METALLUS INC. |
|
|
|
|
|
|
Date: |
November 3, 2026 |
/s/John M. Zaranec |
|
|
John M. Zaranec Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
36
Exhibit 31.1
CERTIFICATION
I, Michael S. Williams, certify that:
I have reviewed this quarterly report on Form 10-Q of Metallus Inc.;
Date: |
|
November 3, 2026 |
/s/ Michael S. Williams |
|
|
|
Michael S. Williams |
|
|
|
Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, John M. Zaranec, certify that:
I have reviewed this quarterly report on Form 10-Q of Metallus Inc.;
Date: |
|
November 3, 2026 |
/s/John M. Zaranec |
|
|
|
John M. Zaranec |
|
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Metallus Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
Date: |
November 3, 2026 |
/s/ Michael S. Williams |
|
|
Michael S. Williams Chief Executive Officer (Principal Executive Officer) |
Date: |
November 3, 2026 |
/s/John M. Zaranec |
|
|
John M. Zaranec Executive Vice President and Chief Financial Officer (Principal Financial Officer) |