Metallus Inc.'s Q2 2025: Navigating Contradictions in A&D Orders, Energy Demand, and Automotive Outlook

Shipment and Revenue Growth:
- Metallus reported a 10% increase in shipments and 9% sequential increase in net sales to $304.6 million in Q2.
- The growth was primarily driven by higher shipments across all end markets, including aerospace and defense, automotive, and energy.

Safety Improvements:
- Metallus invested approximately $5 million to enhance safety management systems and equipment upgrades in 2025.
- These investments led to a 40% reduction in injury severity and a 6% reduction in injury frequency compared to the same period last year.

VAR Steel Market Expansion:
- VAR-related sales more than doubled year-to-date compared to the first half of 2024, with an expected $30 million in VAR-related revenue by the end of 2025.
- The expansion in VAR steel sales was driven by Metallus' strategic relationship with a VAR supplier and the enhanced strength and durability of VAR steel.

Cash Flow and Government Funding:
- Metallus received $81.5 million of government funding by the end of July, with an expectation of receiving the remaining committed funding throughout 2025 and into 2026.
- This funding will be used for investments in a new bloom reheat furnace and roller furnace, supporting the Army's increased demand for artillery shells.

Labor and Cost Management:
- The company anticipates $3 million to $5 million in nonrecurring labor agreement negotiation costs in the second half of 2025.
- These costs will be reported as operational costs and not excluded from adjusted EBITDA, consistent with prior years.