Metallus Inc. Reports 12.8% Decline in Net Sales and 56.7% Drop in Gross Profit for Q1 2025

Metallus Inc. reported a significant decline in financial performance for the first quarter of 2025, with net sales totaling $280.5 million, down 12.8% from $321.6 million in the same period last year. The decrease was attributed to unfavorable price/mix dynamics, a reduction in surcharges, and lower shipment volumes. Specifically, unfavorable price/mix accounted for a $25.9 million decline, while lower surcharges contributed an additional $11.4 million to the decrease. The company recorded a net income of $1.3 million, a stark contrast to the $24.0 million profit reported in the first quarter of 2024.

In terms of operational metrics, Metallus experienced a drop in gross profit, which fell by 56.7% to $21.9 million compared to $50.6 million in the prior year. This decline was primarily driven by lower base prices across key end-markets, particularly in aerospace and defense, which saw reduced shipments. Selling, general, and administrative expenses increased slightly by 0.8% to $25.0 million, reflecting higher salary and benefits costs associated with ongoing IT transformation projects. The company’s effective tax rate also rose sharply to 53.3% from 20.0% in the previous year, largely due to lower pre-tax income.

Strategically, Metallus has been active in capital investments, allocating $27.5 million in the first quarter, including $13.9 million funded by a government contract with the U.S. Army aimed at enhancing munitions production capabilities. The company received $12.9 million in funding under this agreement, which is part of a larger $99.75 million contract. This funding is intended to support the commissioning of new manufacturing assets, including a continuous bloom reheat furnace and a roller hearth heat treat furnace, expected to be operational by late 2025 and early 2026, respectively.

The company’s liquidity position remains strong, with total liquidity reported at $432.0 million, including cash and cash equivalents of $180.3 million as of March 31, 2025. However, cash used in operating activities was $38.9 million, primarily due to increased pension contributions and higher working capital needs. Metallus also continued its share repurchase program, buying back approximately 0.4 million shares at an average price of $14.23 per share, leaving $97.2 million available under the program.

Looking ahead, Metallus anticipates that ongoing government funding and strategic investments will bolster its operational capabilities and market position. The company is closely monitoring trade developments, including tariffs that may positively impact demand for its products. Despite the challenges faced in the first quarter, management remains optimistic about future performance, supported by a strong balance sheet and strategic initiatives aimed at enhancing production efficiency and market competitiveness.