Metallus Inc.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2025 Metallus, Inc. earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star then the number one on your telephone keypad. I would now like to turn the call over to Jennifer Beeman. Jennifer, please go ahead.

Good morning, and welcome to Metallus' third quarter 2025 conference call. I'm Jennifer Beeman, Director of Communications and Investor Relations for Metallus. Joining me today is Mike Williams, Chief Executive Officer, Chris Westbrooks, President and Chief Operating Officer John Zarenek, Executive Vice President and Chief Financial Officer, and Kevin Rakitic, Executive Vice President and Chief Commercial Officer. You all should have received a copy of our press release, which was issued last night. During today's conference call, we may make forward-looking statements as defined by the SEC. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in yesterday's release. Please refer to our SEC filings, including our most recent Form 10-K and Form 10-Q, and the list of factors included in our earnings release, all of which are available on the Metallus website. Where non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are also included in the earnings release. With that, I'd like to turn the call over to Mike. Mike?

Good morning, and thank you for joining us today. I want to start with safety. Throughout the year, we've been dedicated to our mission of being recognized as having the safest specialty metals operation in the world. In line with this mission, we continue to make substantial investments in the safety of our people. We remain on track to spend $5 million to further enhance our safety management systems and critical equipment this year. To date in 2025, we've had zero serious injuries. These are events which are life threatening or life altering. We have also had a 15% reduction in days away and restricted work cases and a 34% reduction in lost and restricted work days compared to the same period a year ago. In October, we successfully completed our planned annual maintenance shutdown at the Faircrest facility. These shutdowns are highly coordinated efforts involving collaboration between our teams and external contractors. Over the course of nine days, we performed essential maintenance to ensure the 2026 reliability and performance of our melt shop assets. Most importantly, I'm proud that the Faircrest shutdown was completed without any serious safety incidents. As a reminder, we will see additional shutdown activities in our other facilities in the late fourth quarter. Customer feedback continues to reaffirm the strength of our service and quality. We recently wrapped up our annual customer survey, and I'm pleased that over 97% of respondents said they would recommend Metallus products to others, a testament to the exceptional work our teams deliver every day. As expected, the survey showed that most customers prefer buying steel made in the United States, and it's a key factor in their purchasing decision. We're seeing continued interest from both new and longstanding customers who are actively shifting toward domestic supply chain solutions. So far in 2025, we've successfully sold to over two dozen new customers, which will contribute to the future business growth. In addition, we saw a substantial year-over-year increase in our overall order backlog. Specifically, aerospace and defense backlog is up approximately 80% compared to a year ago. As we enter the final quarter of the year, we've begun our annual commercial contract negotiations. Our goal remains to secure approximately 70% of our long products business through annual agreements. While we're in the midst of negotiations, customer conversations have been encouraging for 2026. Now turning to business results for the third quarter. Despite shipments being down slightly from the second quarter, sales increased as a result of favorable product mix with continued expansion in the aerospace and defense end market. On a year-over-year basis, shipments in the third quarter improved by 36%, driven by broad-based improvements across all end markets. Our current lead times extend to late January for our SPQ bars and February for our seamless mechanical tubing products. Adjusted EBITDA rose sequentially to $29 million, driven by our growing participation in the aerospace and defense end market and stability across the other end markets. Additionally, higher levels of production during the quarter resulted in greater fixed cost leverage. Now let's cover some of the third quarter highlights of our specific end markets. Industrial shipments decreased slightly in the third quarter on a sequential basis. Distribution customer inventories have improved, but still remain lean and in line with demand. Several key customers have indicated plans to ramp up operations and are projecting stronger forecasts for 2026, while others remain cautious mostly monitoring year-end inventory levels. Automotive shipments increased slightly on a sequential basis. Key automotive customer demand was solid throughout the quarter, and we have not yet experienced any disruption due to global supply chain challenges. Energy shipments remain at reduced volumes on a sequential basis, with import levels declining and tightened enforcement of tariffs we are beginning to capture greater customer share for 2026. However, overall energy market conditions still remain subdued. Finally, higher shipments in aerospace and defense contributed to a favorable product mix this quarter. We continue to gain traction across both new and existing programs, all supporting our targeted annual A&D sales run rate of $250 million by mid-2026. In the quarter, we added several new customer opportunities for our specialty bar and tubing products for applications, including new munitions programs, gun barrels, and aerospace bearings. We also recently secured prototype orders with multiple customers that, once fully commercialized, will utilize Metallus's carbon and specialty alloys in newer warheads, and in rocket motor casings, these are applications where strength, efficiency, quality, and shorter lead times are critical. Today, Metallo supports several dozen defense programs, with growth coming from both traditional prime contractors and emerging industry producers. We are on track with the construction of the bloom reheat and roller furnaces. Both assets will increase our capability and optimize our throughput. We remain optimistic about the future in the growing aerospace and defense market. Turning to another bright spot, we are focused on growing our participation in the vacuum arc remount or VAR steel product line. We recently executed a long-term supply agreement with a trusted partner for VAR Steel, strengthening our strategic position and securing a reliable, high-quality material source to support ongoing sales and profit growth. Before I turn it over to John, I'd like to provide a brief update regarding our labor negotiations. As we announced on October 30th, members of our local usw voted not to ratify the tentative labor agreement we had reached with the union negotiating committee while we're disappointed by the outcome we remain committed to securing a fair agreement that supports our employees and aligns with metallis's long-term strategic goals the current contract has been extended by 90 days to january 29 2026. and we expect our operations to continue without disruption. We appreciate the support of our shareholders, the trust of our customers, and the dedication of our employees as we look forward to a stronger 2026. Now I'd like to turn the call over to John.