Metallus Reports Fourth-Quarter and Full-Year 2024 Financial Results
On February 27, 2025, Metallus, a prominent name in specialty metals, manufactured components, and supply chain solutions, shared its financial results for the fourth quarter and full year of 2024. Despite a challenging market environment characterized by weak demand, particularly in key sectors like industrial and automotive, the company remains focused on strategic investments and has a hopeful outlook for the upcoming year.
Fourth-Quarter Performance
Metallus recorded net sales of $240.5 million in the fourth quarter of 2024, a 6% increase from the previous quarter’s $227.2 million. The growth in sales was primarily attributed to higher shipments and a favorable product mix, particularly in the aerospace & defense sectors, which helped offset declines in other end markets. However, the company reported a net loss of $21.4 million, or a loss of $0.50 per diluted share. On an adjusted basis, the loss was reduced to $3.3 million, or $0.08 per diluted share, with an adjusted EBITDA of $8.3 million for Q4.
This performance represents a stark contrast to Q4 2023, where the company achieved net sales of $328.1 million and net income of $1.3 million. The weakening of shipments and lower base sales prices significantly impacted year-over-year results.
The melt utilization rate (the ratio of metal that is successfully processed to the total potential output) dropped to 56%, compared to 60% in Q3 2024, due to planned shutdown maintenance and downtime to align inventory with demand. Manufacturing costs saw a sequential increase of $10.3 million, reflecting lower cost absorption during the quarter.
Full-Year 2024 Financial Summary
For the full year 2024, Metallus reported net sales of $1.1 billion, a 20% decrease from the prior year, mainly driven by lower shipments and a decline in raw material surcharge revenue. The company shipped a total of 555,500 metric tons in 2024, a decrease of 19% from 2023, with significant drops in shipments across automotive, industrial, and energy sectors, except for aerospace & defense.
Despite these challenges, Metallus posted a net income of $1.3 million, or $0.03 per diluted share. This marked a dramatic decline compared to $69.4 million in net income, or $1.47 per share, in 2023. On an adjusted basis, the full-year net income was $25.1 million, or $0.57 per diluted share, down from $89.8 million in 2023. The adjusted EBITDA was $77.7 million, a significant drop from $169 million in the prior year.
The decline in net sales was primarily due to a combination of lower shipments, lower sales prices, and weaker demand across several key sectors. However, the company’s aerospace & defense business showed some resilience, growing by 17% year-over-year to $134.9 million in 2024, representing 12% of the total sales, up from 8% in 2023.
Capital Allocation and Cash Flow
Metallus continued to prioritize capital investment and share repurchases in 2024. The company invested $64.3 million in capital expenditures, including $8.0 million funded by the U.S. government for specific projects. Additionally, $54.8 million was spent on the repurchase of common shares and convertible notes, signaling the company’s commitment to returning capital to shareholders.
Despite the challenging market conditions, Metallus generated a positive operating cash flow of $13.9 million in Q4 and $40.3 million for the full year. The cash and cash equivalents balance stood at $240.7 million at the end of 2024, with total liquidity of $458.6 million, providing the company with ample resources to weather market uncertainty.
Furthermore, Metallus repurchased $7.8 million worth of its convertible notes in Q4, at a cost of $17.2 million, reducing the outstanding principal balance to $5.5 million by the end of 2024. This resulted in a decrease of approximately 1 million shares in its diluted share count going forward.
During the fourth quarter, the company also repurchased approximately 0.2 million common shares for $3.5 million, with a total of 2 million shares repurchased for $37.6 million throughout the year, representing 4.7% of its outstanding shares. As of the end of 2024, Metallus had $102.8 million remaining on its authorized share repurchase program.
Government Funding
In 2024, Metallus received significant government funding in support of its expansion efforts. These included $7.0 million from the U.S. Army as part of a $99.75 million capacity expansion agreement, aimed at increasing munitions production. Additionally, the company received $1.0 million from JobsOhio as part of a previously announced $3.5 million grant. Throughout 2024, Metallus received $53.5 million in government funding, with further funding expected in 2025 and 2026 as part of agreed-upon milestones.
Outlook for 2025
Looking ahead to 2025, Metallus is cautiously optimistic as early indicators point to improving market conditions. First-quarter shipments are expected to increase from Q4 2024, driven by stronger order volumes. Lead times for both bar and tube products have extended to May, signaling solid demand. Metallus has already completed annual price agreement negotiations covering approximately 70% of the order book, with base prices expected to decrease by low to mid-single digits in 2025, depending on the mix of products.
The company expects higher first-quarter surcharge revenues per ton, primarily driven by increased scrap prices. Additionally, melt utilization is projected to improve to around 70% in the first quarter, as customer demand strengthens. Metallus anticipates that manufacturing costs will improve sequentially as planned maintenance from Q4 2024 is completed and higher melt utilization drives better cost absorption.
Planned Investments and Cost Considerations for 2025
Metallus has outlined a $125 million capital expenditure plan for 2025, including $90 million funded by the U.S. government. The company expects pension contributions to be around $65 million for the year and anticipates an effective income tax rate of approximately 25%.
Key Takeaways:
• Fourth-quarter 2024 net sales were $240.5 million, a 6% increase from Q3 2024, but the company recorded a net loss of $21.4 million.
• Full-year 2024 net sales reached $1.1 billion, a 20% decrease compared to 2023, driven by lower shipments and decreased surcharge revenue.
• Adjusted EBITDA for 2024 was $77.7 million, compared to $169 million in 2023.
• Aerospace & defense sales increased 17%, contributing to 12% of total 2024 sales.
• Metallus repurchased 2.0 million shares for $37.6 million, representing 4.7% of its outstanding shares in 2024.
• The company has $240.7 million in cash and $458.6 million in total liquidity at the end of 2024.
• Operating cash flow for Q4 2024 was $13.9 million, and for the full year, it was $40.3 million.
• Metallus received $53.5 million in government funding in 2024, with more funding expected in 2025 and 2026.
• Melt utilization is expected to rise to 70% in the first quarter of 2025, driven by stronger demand.
• The company expects $125 million in capital expenditures for 2025, with $90 million funded by the U.S. government.
