Metallus recently released its 10-Q for the three months ended March 31, 2026. The company manufactures alloy steel, carbon and micro-alloy steel products using electric arc furnace technology, with a portfolio that includes special bar quality bars, seamless mechanical tubing, precision steel components and billets. Its products are sold into industrial, automotive, aerospace and defense, and energy markets, and the company is headquartered in Canton, Ohio.
In Item 2, Metallus said it operates as one reportable segment, with management evaluating performance and allocating resources on a consolidated basis. The company highlighted $24.7 million of capital investments in the quarter, including spending on safety, automation, continuous improvement and new assets aimed at increasing throughput and efficiency, with much of that work being funded by the U.S. government. It also received $4.9 million in government funding during the quarter under a previously announced $99.75 million agreement tied to U.S. Army munitions production, bringing cumulative government funding received to $91.5 million against total spend of $108.1 million as of March 31, 2026.
Metallus ended the quarter with total liquidity of $374.7 million, including $104.0 million of cash and cash equivalents. Operating cash flow was an outflow of $26.9 million, driven mainly by higher working capital needs and the timing of pension contributions. The company repurchased 0.3 million shares for $4.3 million and had $85.4 million remaining under its authorized repurchase program.
Net sales for the quarter were $308.3 million, up $27.8 million, or 9.9%, from $280.5 million a year earlier. Excluding surcharges, net sales were $238.3 million, up $16.1 million, or 7.2%. Shipments rose to 163.8 thousand ship tons from 152.9 thousand, an increase of 10.9 thousand ship tons.
By end market, industrial net sales were $112.3 million versus $101.7 million a year earlier, automotive was $112.7 million versus $113.2 million, aerospace and defense was $51.9 million versus $32.5 million, and energy was $26.7 million versus $28.7 million. Surcharges totaled $70.0 million, up from $58.3 million, with the increase tied to higher shipments and higher scrap, alloy and energy prices.
Gross profit increased $3.2 million, or 14.6%, from the prior-year quarter, helped by higher volume, favorable price/mix and raw material spread. That was partly offset by higher manufacturing costs, including utility costs, costs tied to the newly ratified union contract and spending on manufacturing optimization projects. SG&A expense fell $2.1 million, or 8.6%, to reflect lower professional services and salary and benefits expense.
Net interest income was $0.4 million, down from $1.5 million a year earlier, due to lower interest rates and lower average cash balances. Other income, net was $4.9 million, compared with $2.3 million in the prior-year quarter, reflecting pension and postretirement benefit income and a $2.5 million gain from remeasurement of benefit plans. The provision for income taxes was $2.6 million, versus $1.6 million, and the effective tax rate declined to 32.5% from 53.3%.
On liquidity, Metallus reported $276.0 million of availability under its credit agreement, $270.7 million of availability not borrowed, and no borrowings outstanding. The company said it expects 2026 capital expenditures of about $70 million, including about $35 million funded by the U.S. government. It also said USW Local 1123 ratified a new four-year labor agreement on February 5, 2026, and Metallus made a one-time $1.9 million payment to union employees in the first quarter, plus $0.3 million in related external-party payments. The market has reacted to these announcements by moving the company's shares 2.52% to a price of $19.09. If you want to know more, read the company's complete 10-Q report here.
