Metallus (NYSE:MTUS) reported higher second-quarter sales and profitability, citing improved shipments, pricing, product mix and melt utilization as demand strengthened across several end markets. The specialty metals producer said its order book increased more than 50% from a year earlier, with lead times for engineered SBQ bar and seamless mechanical tubing extending into late fourth-quarter 2026.
Second-quarter net sales totaled $341 million, up $36.4 million, or 12%, from the prior-year period. Net income was $8.9 million, or $0.21 per diluted share, while adjusted net income was $11.1 million, or $0.26 per diluted share. Adjusted EBITDA rose 9% year over year to $29 million.
Profitability Gains Offset by Manufacturing Costs
Chief Financial Officer John Zaranec said improved prices, mix and shipment volumes supported profitability. However, those gains were partly offset by manufacturing performance, as melt utilization improved but did not reach the company’s plan to fully offset higher energy costs and the first full quarter of labor costs associated with its newly ratified union contract.
Metallus reported operating cash flow of $12.8 million during the quarter, driven by profitability and lower inventory. Higher accounts receivable associated with increased sales and lower accounts payable related to the timing of raw-material purchases partially offset those benefits.
The company spent $15.2 million on capital expenditures in the quarter, including about $9.5 million for projects primarily funded by the U.S. government. Metallus continues to expect approximately $70 million in capital expenditures for full-year 2026, including about $35 million primarily funded by the government.
Cash and cash equivalents stood at $108.6 million at quarter-end. Metallus received the final $11.3 million of U.S. Army funding during the quarter under a previously announced agreement totaling nearly $100 million intended to support increased munitions production.
Capital Projects Advance as Aerospace and Defense Demand Rises
Williams said the company fully commissioned its bloom reheat furnace in early July. The furnace is intended to improve process consistency, downstream product flow and reliability. Commissioning of a roller furnace remains on track, according to the company.
The two projects, supported in part by government funding, are expected to improve throughput, quality, efficiency and customer service levels once fully operational. Metallus plans to host a ribbon-cutting event during the third quarter with U.S. government representatives, defense customers and industry partners.
Aerospace and defense posted record shipment tons and sales in the second quarter, supported by new defense initiatives and replenishment efforts for existing programs. Williams said increased demand for 155mm and other munitions, along with new programs beginning to generate demand, drove the quarterly increase.
The company reaffirmed its expectation to reach at least a $250 million aerospace-and-defense revenue run rate by the end of 2026. Metallus also obtained AS9100D certification during the quarter, a quality-management standard for aerospace and defense. Williams said the certification broadens the range of customers and applications the company can serve and is expected to expand its opportunities in the market.
End-Market Trends and Commercial Outlook
Automotive shipments rose 12% sequentially and 8% year over year in the second quarter. Metallus said demand in targeted light-truck and SUV applications remained steady. The company also secured a multiyear award for ring gears on a leading automaker’s hybrid-transmission platform, with production expected to begin in 2028.
Industrial shipments declined slightly both sequentially and year over year because of customer requirements and shipment timing. Still, Metallus said industrial backlog nearly doubled from the prior year. Williams identified construction and mining equipment, or “yellow goods,” as the principal source of industrial demand growth, with additional improvement in agricultural and rail markets.
Energy demand remained stable amid cautious capital spending, though the company said reduced import competition and improving domestic production were supporting demand for its seamless tubing products. Williams said modestly higher U.S. drilling activity and the trade-tariff environment have encouraged domestic and global energy companies to seek more domestic supply.
For the third quarter, Metallus expects shipments to be similar to the second quarter, while price and mix should be slightly better. The company expects a modest sequential increase in average melt utilization, though manufacturing costs are projected to remain relatively flat as improved utilization is offset by planned maintenance outages.
Metallus recently announced price increases effective in early August for customers not covered by annual pricing agreements: $60 per ton for bar, $100 per ton for carbon seamless mechanical tubing and $160 per ton for alloy seamless mechanical tubing. The company expects to realize the full run-rate benefit beginning in 2027.
The company expects third-quarter adjusted EBITDA to be slightly higher both sequentially and year over year. It also projected a full-year adjusted effective income tax rate of 27% to 30%.
Liquidity, Pensions and Share Repurchases
On June 30, Metallus refinanced its asset-based revolving credit facility and extended its maturity to June 2031. The facility now has $300 million of committed capacity and an optional expansion feature of up to $200 million. Total liquidity was $395 million at quarter-end, and the company had no outstanding borrowings.
Metallus made $5.4 million in required pension contributions related to its U.S. bargaining plan during the quarter and expects no additional pension contributions for the remainder of 2026. The company said its 2026 pension contributions represent a reduction of more than 60% from 2025.
During the quarter, Metallus repurchased approximately 190,000 common shares for $3.6 million. As of the end of June, $81.8 million remained under its existing share repurchase authorization.
About Metallus (NYSE:MTUS)
Metallus, Inc (NYSE:MTUS) is an industrial metals recycling and distribution company that acquires, processes and markets a wide array of ferrous and non-ferrous materials. Its product portfolio includes stainless steel, nickel alloys, aluminum and other specialty metals sourced from manufacturing scrap, obsolete products and post-consumer waste streams. Metallus provides services such as shredding, sorting, melting and baling, enabling its customers to optimize metal recovery and streamline supply chains.
Headquartered in Philadelphia, Pennsylvania, the company operates processing facilities and distribution centers across the United States, facilitating efficient logistics and regional collection of metal grades.
