The following is a summary of the Metallus Inc. (MTUS) Q3 2024 Earnings Conference Call Transcript:

Financial Performance:

• Metallus Inc. reported a net loss of $5.9 million in Q3 2024, compared to net income in the prior year, largely due to a decrease in shipments, unfavorable product mix, and a reduction in raw material surcharge revenue.

• Revenue decreased by 23% sequentially to $227.2 million, while Adjusted EBITDA was $6.1 million, a decline driven by lower shipments and unfavorable product mix.

• Capital investments amounted to over $17 million in the quarter, focusing on safety, product quality, and efficiency enhancements. Additionally, the company repurchased 4.2% of its shares outstanding to date this year, reflecting a strong balance sheet and cash management.

Business Progress:

• Metallus Inc. remains focused on improving safety measures with significant investments, achieving a 29% reduction in the OSHA recordable rate.

• Investments in manufacturing capabilities include an automated grinding line and a new Bloom Reheat furnace, with a focus on the aerospace and defense sectors.

• The company held its annual contract negotiations targeting 70% of annual contracts, indicating strong customer relationships and reliable income streams.

Opportunities:

• Expected increase in aerospace and defense shipments in Q4 2024 and beyond, buoyed by capacity expansions and new programs targeting higher demand and establishing long-term agreements with defense customers.

• The SBQ and seamless mechanical tubing market pressures may be alleviated by increased Section 301 tariffs, particularly against Chinese imports, potentially benefiting Metallus in future periods.

Risks:

• Declines in automotive shipments due to equipment issues and seasonal patterns, with a 16% sequential decrease observed, highlighting potential ongoing challenges in this sector.

• Market pressures from imports in the tubing markets indicate vulnerability to international competition and price pressures.

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