An Ohio steel mill that makes special bars and tubes for gears, bearings and drilling, and the steel the US Army's artillery shells are made from.
Our viewNeutralMedium conviction
The scores
The profile · 1-4
Growth2/4 ↑
Trailing sales grew 16% and orders over 50%, but 2025 sales were below 2021's after a 20% fall in 2024; only defense grows steadily.
Business quality2/4 ↑
A protected defense niche at about 1.6 times the revenue per ton, inside bar and tube markets where larger mills compete on price.
Financial position3/4 →
No debt, $108.6M of cash and $395M of liquidity, against a $105M pension and retiree medical liability and thin cash flow.
Execution record2/4 →
Won the defense business and bought back a quarter of the shares, but missed the 2025 EBITDA target and the mill keeps under-running plan.
Per share capture3/4 →
Diluted shares fell from 55.0M to about 43M since 2021 with small pay in shares; the pension still has a claim on cash.
Potential2/4 ↑
HF-1 for the Army's shell goal is worth about $200M a year and the DLA up to $995M over five years, against $1.2B of sales.
Risk profile2/4 →
One steelmaking site, one customer at 10.6% of sales, a union workforce, a pension, and defense demand set by budgets.
Valuation2/4 ↓
About 9.2 times trailing adjusted EBITDA against a six-year median near 5.8; the price assumes the plan works and the mill recovers.
Evidence quality3/4 →
Results, the Army's figures and the Inspector General's count are public; the DLA's volume and the defense sales target rest on management's word.
The Verdict
We rate Metallus neutral. It is a mixed business: most of its steel goes into car and equipment parts, a market that rises and falls hard, but it is also the Army's one funded source of the steel in artillery shells, and that part is growing. The price is full. At about 9 times last year's cash earnings, the shares already cost what earnings about 60% higher, close to the last peak, would usually justify. That needs the mill to run better and the new defense orders to add to sales rather than replace them. Both are plausible, and neither is shown yet.
The long caseThe Army is rebuilding shell stocks and has chosen Metallus as its one funded source of shell steel; the mill must run better to turn that into earnings.
The evidence under this - 6 claims
C13facthigh confidence
The Army says Metallus has made HF-1, the steel for 155mm artillery shell bodies, continuously since 1993. An Army agreement of February 2024 paid $99.75M for a bloom reheat furnace and a roller hearth furnace, commissioned on 26 August 2026, which the Army says will make enough HF-1 for over 120,000 metal parts a month at full capacity, from 1,500 to 6,720 tons of HF-1 a month. The steel also serves guided rockets and bombs.
The Defense Logistics Agency awarded Metallus a single-award, firm fixed-price contract for HF-1 steel with a five-year ordering period to 24 September 2031 and a ceiling of $995M, which the company says is not a commitment to buy. The first delivery order, about $125M, came on 29 September, with up to 24 months to fill each order. It was awarded without competition to keep a producer available for industrial mobilization, for about 438 million pounds of steel in 6.75-inch forged bars.
Net sales were $1,282.9M in 2021, $1,329.9M in 2022, $1,362.4M in 2023, $1,084.0M in 2024 and $1,158.3M in 2025. Net income was $171.0M, $65.1M and $69.4M in 2021 to 2023. Pretax income plus depreciation was $155.4M in 2022, $153.3M in 2023, $58.7M in 2024 and $58.5M in 2025, and cash from operations fell from $125.3M in 2023 to $40.3M in 2024 and $16.0M in 2025.
2025's cash flow carried $62.0M of pension contributions that management says end in 2026 (C10), so cash from operations understates the business.
historical · FY 2021 to FY 2025written 2026-10-06
C22inferencemedium confidence
At $21.04 the shares cost about 9.2 times trailing adjusted EBITDA and 15.9 times analysts' 2027 earnings. At its own six-year median of about 5.8 times, the enterprise value needs about $135M of EBITDA, about 60% above the trailing $85.0M and close to the 2022 and 2023 peak.
derivedEnterprise value of $781.9M (C21) over adjusted EBITDA of $85.0M (C05) is 9.2 times; the vendor's EV to EBITDA is 11.4 against a six-year median of 5.8 (S20). $781.9M over 5.8 is about $135M, against $155.4M and $153.3M of pretax income plus depreciation in 2022 and 2023 (C06). $21.04 over 2027 consensus EPS of $1.325 (C23) is 15.9 times, against a six-year median P/E of 8.6 (S20).
against this
Defense sales carry about 1.6 times the company's revenue per ton (C03) and are growing on government-funded assets, so a richer mix could earn a higher multiple than the old cycle's median.
forwardwritten 2026-10-06
C05facthigh confidence
Adjusted EBITDA was $29.0M in the September 2025 quarter, $2.4M in December, when the company lost $14.3M, $24.6M in March 2026 and $29.0M in June: $85.0M over four quarters. Sales over the same four quarters were $1,222.5M, up 16% from $1,052.8M, net income $8.1M and cash from operations $6.0M.
Adjusted EBITDA excludes items the company chooses; the vendor's EBITDA for the same period is lower, about $68M, so the multiple on it is 11.4 rather than 9.2 (C22).
historical · four quarters to 30 June 2026written 2026-10-06
C09management claimhigh confidence
The chief executive said Q2's 74% melt rate fell short of plan partly because of power interruptions under an interruptible supply agreement, but more because of shop floor execution and maintenance reliability, which he called the biggest single cost opportunity.
The rate was still up on Q1, and the Army-funded furnaces commissioned in August are meant to lift throughput (C13), so the shortfall may already be narrowing.
current state · 2026-08-04written 2026-10-06
01
The company
Metallus makes special-bar-quality steel: clean, precisely mixed steel bars up to 16 inches across, and seamless tubes, for parts that must not crack, such as gears, bearings, axles and drill tools. It melts scrap in electric furnaces in Canton, Ohio, and shipped 631.7 thousand tons in 2025 to about 330 customers.
Its best-known product is HF-1, a steel that breaks into many fragments, forged by others into 155mm artillery shell bodies. Buyers could get ordinary bars from Steel Dynamics, Nucor or Gerdau; HF-1 they cannot.
The evidence under this - 3 claims
C01facthigh confidence
Metallus makes special-bar-quality steel bars up to 16 inches across, seamless mechanical tubing, machined components and billets from scrap melted in electric arc furnaces in Canton, Ohio, with about 1.2 million tons of melt capacity and 0.9 million tons of shipping capacity. It reports one segment, sells to about 330 customers, about 20% through distributors, and in 2025 shipped 631.7 thousand tons.
The Army says Metallus has made HF-1, the steel for 155mm artillery shell bodies, continuously since 1993. An Army agreement of February 2024 paid $99.75M for a bloom reheat furnace and a roller hearth furnace, commissioned on 26 August 2026, which the Army says will make enough HF-1 for over 120,000 metal parts a month at full capacity, from 1,500 to 6,720 tons of HF-1 a month. The steel also serves guided rockets and bombs.
Metallus's 10-K names Gerdau's North American special steel mills as its main rival below 6 inches, Steel Dynamics and Nucor up to 9 or 10 inches, offshore mills and the private forgers Scot Forge and Frisa from 10 to 16 inches, and Tenaris, Vallourec, TMK and ArcelorMittal Tubular in tubing. Steel Dynamics' and Nucor's own 10-Ks describe special-bar-quality bar mills; none of the four rivals' filings mentions HF-1 or shell steel.
Metallus sells steel by the ton. Each price has two parts: a base price, and a surcharge that passes changes in scrap and alloy costs to the customer a few months later. About 70% of orders are on annual agreements, so prices reset once a year.
In 2025 cars took 41% of sales, industrial equipment 35%, defense 14% and energy 9%. Defense earned $2,887 a ton, against $1,834 for the company as a whole.
The evidence under this - 4 claims
C03facthigh confidence
By end market in 2025: industrial 257.8 thousand tons and $408.1M of sales, automotive 269.5 thousand tons and $472.3M, aerospace and defense 55.9 thousand tons and $161.4M, energy 48.5 thousand tons and $99.4M. Aerospace and defense was about 14% of sales, against 12% in 2024 and 8% in 2023, at $2,887 of sales a ton against $1,834 for the company. Base prices fell $60.7M across all markets.
One customer was 10.6% of 2025 sales and the ten largest about half. All steel is made in Canton, where about 1,200 of 1,865 employees, 61.9%, belong to United Steelworkers Local 1123 under a contract to 30 September 2029. Most sales carry a surcharge passing scrap and alloy costs through with a lag.
Management expects September 2026 quarter adjusted EBITDA slightly above Q2's and Q3 2025's $29.0M, shipments similar to Q2 and a slightly higher melt rate, with a large maintenance outage in Q4. It raised prices in August by $60 a ton on bar and $100 to $160 on tube for the roughly 30% of the order book not on annual agreements, fully felt from 2027. Capital spending is about $70M in 2026, $35M of it government-funded.
Q2's melt rate fell short of plan for reasons management put on its own shop floor (C09), and Q4 2025's adjusted EBITDA was $2.4M (C05).
forwardwritten 2026-10-06
C02facthigh confidence
In 2025 net sales were $1,158.3M, up 6.9% from $1,084.0M, and the company lost $1.2M; adjusted net income was $15.3M, $0.37 a share, and adjusted EBITDA $75.6M against $77.7M in 2024. Cash from operations was $16.0M after $62.0M of pension contributions, and capital spending $109.0M, of which $81.3M was the Army-funded project.
Bars and tubes for gears, bearings, axles and transmissions, sold mostly to parts makers under annual agreements.
Industrial
35%
Bars and tubes for construction, mining and farm equipment, rail and bearings, about a fifth of it through distributors.
Aerospace and defense
14%
HF-1 shell steel and other defense and aerospace bar, at about $2,887 of sales a ton.
Energy
9%
Seamless tubes and bars for drilling tools and oil and gas equipment.
Other
1%
Scrap and other sales.
Who runs it
Michael Williams has been chief executive since 2021 and retires at the end of 2026. Kristopher Westbrooks, who joined in 2018 as finance chief and now runs operations, takes over on 1 January 2027.
Directors and officers own 3.8% of the company and sold shares this year rather than bought. Their bonus pays mostly on cash earnings and cash flow; it paid 102.5% for 2025 although cash earnings missed their target.
The evidence under this - 3 claims
C27facthigh confidence
Chief executive Michael Williams, in the job since January 2021, retires on 31 December 2026 and stays as an adviser to 30 June 2027. Kristopher Westbrooks, president and chief operating officer, who joined in 2018 as finance chief, becomes chief executive on 1 January 2027.
BlackRock held 15.2% of the shares, Ellwood Group 10.3%, Vanguard 7.6%, Dimensional 6.9% and State Street 5.5%; directors and officers 3.8%. In the pack's window insiders made 14 open-market sales of 112,771 shares and no purchases; the chief executive's sales on 2 and 5 October were under a Rule 10b5-1 plan.
The 2025 bonus paid 50% on adjusted EBITDA, against a $90.0M target met at $75.6M, 30% on adjusted operating cash flow, $73.2M against $60.5M, and 20% on safety, and paid out at 102.5%. Performance shares vest on shareholder return against steel peers; the 2023 to 2025 grant paid 41.1%, at the 10th percentile.
historical · FY 2025 bonus and 2023 to 2025 performance shareswritten 2026-10-06
02
Why it wins, and who could beat it
Why customers come back
In ordinary bars there is little to stop a customer switching to a bigger mill. Defense is different. The Army has bought HF-1 from Metallus continuously since 1993, paid $99.75M for two new furnaces in Canton, and the Defense Logistics Agency gave it a five-year contract without competition to keep a supplier ready in an emergency.
That protection is the government's choice and its approval, not something a rival could never copy. The Army needs the steel badly: it makes 36,000 shells a month against a goal of 100,000.
The evidence under this - 6 claims
C13facthigh confidence
The Army says Metallus has made HF-1, the steel for 155mm artillery shell bodies, continuously since 1993. An Army agreement of February 2024 paid $99.75M for a bloom reheat furnace and a roller hearth furnace, commissioned on 26 August 2026, which the Army says will make enough HF-1 for over 120,000 metal parts a month at full capacity, from 1,500 to 6,720 tons of HF-1 a month. The steel also serves guided rockets and bombs.
The Defense Logistics Agency awarded Metallus a single-award, firm fixed-price contract for HF-1 steel with a five-year ordering period to 24 September 2031 and a ceiling of $995M, which the company says is not a commitment to buy. The first delivery order, about $125M, came on 29 September, with up to 24 months to fill each order. It was awarded without competition to keep a producer available for industrial mobilization, for about 438 million pounds of steel in 6.75-inch forged bars.
The Defense Department's Inspector General reported that the Army made 36,000 155mm rounds a month in March 2026 against a goal of 100,000 by October 2025, that projectile metal parts are the limiting factor, that three metal parts plants were to go from 14,000 to 71,000 a month by September 2026, that a new plant in Mesquite, Texas had made no parts to specification, and that stocks fell by over 3.6 million rounds in four years.
The DLA ceiling prices HF-1 bar at about $5,000 a ton, against $2,887 for the company's defense sales in 2025, and its tonnage, about 40 thousand tons a year, is two thirds of 2025's defense tons. The first $125M order, filled over up to two years, is worth about $62M a year, about two fifths of 2025's defense sales.
derived$995M over about 438 million pounds, about 199 thousand tons (C14), is about $5,000 a ton; $125M over 24 months (C14) against 2025 defense sales of $161.4M (C03).
against this
The ceiling is not a commitment (C14), and Metallus already sold HF-1 billets to shell makers as a subcontractor (S12), so some DLA steel may replace orders it would have had anyway.
forwardwritten 2026-10-06
C20inferencemedium confidence
No second qualified US source of HF-1 was found: the government has chosen to fund and contract with one mill rather than qualify another. That protection is a government choice and a qualification, not a physical barrier, since three larger US mills already roll bars of the size.
derivedThe DLA justified a sole-source award on industrial mobilization (C14), the Army describes Metallus as the continuous HF-1 producer since 1993 (C13), and no rival's filing mentions the steel (C19). The Army has paid to bring new metal parts makers in when it needed more (C15).
against this
The Army paid to bring a new metal parts maker into Mesquite, Texas when it needed more shells (C15), so it does fund second sources when supply falls short; the chief executive also says new entrants are coming into munitions (C29).
current state · 2026-10-06written 2026-10-06
C03facthigh confidence
By end market in 2025: industrial 257.8 thousand tons and $408.1M of sales, automotive 269.5 thousand tons and $472.3M, aerospace and defense 55.9 thousand tons and $161.4M, energy 48.5 thousand tons and $99.4M. Aerospace and defense was about 14% of sales, against 12% in 2024 and 8% in 2023, at $2,887 of sales a ton against $1,834 for the company. Base prices fell $60.7M across all markets.
Steel Dynamics, Nucor and Gerdau already roll special bars up to 9 or 10 inches and win ordinary bar orders on price. None of their annual reports mentions shell steel, and no second approved maker was found. But the Army has paid to bring new suppliers into the shell chain before, so a second steel source is possible if it wants one.
The evidence under this - 2 claims
C19facthigh confidence
Metallus's 10-K names Gerdau's North American special steel mills as its main rival below 6 inches, Steel Dynamics and Nucor up to 9 or 10 inches, offshore mills and the private forgers Scot Forge and Frisa from 10 to 16 inches, and Tenaris, Vallourec, TMK and ArcelorMittal Tubular in tubing. Steel Dynamics' and Nucor's own 10-Ks describe special-bar-quality bar mills; none of the four rivals' filings mentions HF-1 or shell steel.
No second qualified US source of HF-1 was found: the government has chosen to fund and contract with one mill rather than qualify another. That protection is a government choice and a qualification, not a physical barrier, since three larger US mills already roll bars of the size.
derivedThe DLA justified a sole-source award on industrial mobilization (C14), the Army describes Metallus as the continuous HF-1 producer since 1993 (C13), and no rival's filing mentions the steel (C19). The Army has paid to bring new metal parts makers in when it needed more (C15).
against this
The Army paid to bring a new metal parts maker into Mesquite, Texas when it needed more shells (C15), so it does fund second sources when supply falls short; the chief executive also says new entrants are coming into munitions (C29).
current state · 2026-10-06written 2026-10-06
The rivals:STLD, NUE, GGB, STLD, NUE, GGB, TS, MT, and 1 more that is private, in-house or listed abroad.
Who else does this, rival by rival
Ticker
Rival
Where it competes
How far along
Priced against it
STLD · NUE · GGB
Steel Dynamics, Nucor and Gerdau's US special bar millsPriced against it: Small part of it
Aerospace and defense steel
In research
Small part of it
Steel Dynamics, Nucor and Gerdau
Industrial, automotive and energy bar and tube
On sale
Private
Scot Forge and FrisaPriced against it: Private
Industrial, automotive and energy bar and tube
On sale
Private
TS · MT
Tenaris and ArcelorMittal Tubular ProductsPriced against it: Small part of it
Industrial, automotive and energy bar and tube
On sale
Small part of it
03
How big it could get
How big this could get
Each 155mm shell takes about 56 kilograms of HF-1 before forging and machining. At today's 36,000 shells a month that is about 24 thousand tons a year, worth about $73M at what Metallus earns per defense ton.
At the Army's goal of 100,000 a month it is about 67 thousand tons, about $202M. Stockpile buying, allies' shells, rockets and bombs come on top. The new furnaces can make enough for about 120,000 shells a month.
The evidence under this - 4 claims
C15facthigh confidence
The Defense Department's Inspector General reported that the Army made 36,000 155mm rounds a month in March 2026 against a goal of 100,000 by October 2025, that projectile metal parts are the limiting factor, that three metal parts plants were to go from 14,000 to 71,000 a month by September 2026, that a new plant in Mesquite, Texas had made no parts to specification, and that stocks fell by over 3.6 million rounds in four years.
The 6,720 tons figure comes from trade reports of the Army agreement rather than the Army's own page, and some of that capacity serves rockets and bombs (C13).
current state · 2026-09-02written 2026-10-06
C17inferencemedium confidence
At today's 36,000 rounds a month, US shell production needs about 24 thousand tons of HF-1 a year, about $73M at Q2's defense price per ton; at the 100,000 goal it needs about 67 thousand tons, about $202M. Metallus shipped 55.9 thousand tons to all aerospace and defense buyers in 2025.
derived36,000 rounds a month (C15) times 12 times 0.056 tons (C16) is about 24 thousand tons; 100,000 a month is about 67 thousand. Q2's defense sales of $60.1M over 20.0 thousand tons (C04) is about $3,005 a ton.
against this
Allies' shell programmes, foreign sales, rockets and bombs, and DLA's stockpile buying all use the same steel and are not counted (C13, C14).
current state · 2026-10-06written 2026-10-06
C13facthigh confidence
The Army says Metallus has made HF-1, the steel for 155mm artillery shell bodies, continuously since 1993. An Army agreement of February 2024 paid $99.75M for a bloom reheat furnace and a roller hearth furnace, commissioned on 26 August 2026, which the Army says will make enough HF-1 for over 120,000 metal parts a month at full capacity, from 1,500 to 6,720 tons of HF-1 a month. The steel also serves guided rockets and bombs.
The Defense Logistics Agency can order up to $995M of HF-1 over five years, about 438 million pounds, but the ceiling is not a promise to buy. It has ordered about $125M so far, to be delivered within two years. The Army's $99.75M for the furnaces has been paid in full.
The evidence under this - 3 claims
C14facthigh confidence
The Defense Logistics Agency awarded Metallus a single-award, firm fixed-price contract for HF-1 steel with a five-year ordering period to 24 September 2031 and a ceiling of $995M, which the company says is not a commitment to buy. The first delivery order, about $125M, came on 29 September, with up to 24 months to fill each order. It was awarded without competition to keep a producer available for industrial mobilization, for about 438 million pounds of steel in 6.75-inch forged bars.
The DLA ceiling prices HF-1 bar at about $5,000 a ton, against $2,887 for the company's defense sales in 2025, and its tonnage, about 40 thousand tons a year, is two thirds of 2025's defense tons. The first $125M order, filled over up to two years, is worth about $62M a year, about two fifths of 2025's defense sales.
derived$995M over about 438 million pounds, about 199 thousand tons (C14), is about $5,000 a ton; $125M over 24 months (C14) against 2025 defense sales of $161.4M (C03).
against this
The ceiling is not a commitment (C14), and Metallus already sold HF-1 billets to shell makers as a subcontractor (S12), so some DLA steel may replace orders it would have had anyway.
forwardwritten 2026-10-06
C13facthigh confidence
The Army says Metallus has made HF-1, the steel for 155mm artillery shell bodies, continuously since 1993. An Army agreement of February 2024 paid $99.75M for a bloom reheat furnace and a roller hearth furnace, commissioned on 26 August 2026, which the Army says will make enough HF-1 for over 120,000 metal parts a month at full capacity, from 1,500 to 6,720 tons of HF-1 a month. The steel also serves guided rockets and bombs.
Where the growth is coming from, business by business
Where the growth is coming from
Business
Share of revenue
Growth: last quarter
Last half-year
Last year
Share in 3 years at its half-year rate
Special Bar Quality Bars
65%
+18.7%
+19.8%
+20.6%
76%
Manufactured Components
23%
-3.1%
-7.2%
+3.4%
13%
Seamless Mechanical Tubing
10%
+6.6%
+5.9%
+3.8%
9%
Other Products
2%
+42.2%
+24.7%
+12.9%
2%
Whole company
100%
+12.0%
+11.0%
+13.8%
100%
On the filed split through 2026-06-30, if each business keeps its last half-year's growth, the company grows about 12% next year and 14% in year 3, against 16.1% over the last twelve months. Special Bar Quality Bars grows fastest: it grows 20% against -2% for the rest, and would be 76% of revenue by then. A scenario, not a forecast: no business holds its rate.
How we read it: The blend: bars grow faster than tubes largely on defense and industrial bar, which the score already credits, and both come from one mill exposed to one cycle.
04
The results
The numbers
Is it growing?Steady
Sales grew 16% over the twelve months to Jun 2026, faster than the 6.9% in the year to Dec 2025.
Is it profitable?Thin
It keeps 0.7% of sales as profit, down from 5.1% in the year to Dec 2023.
What does it keep on each sale?Razor-thin
It keeps 8¢ of each sales dollar after making what it sells, and spends 8¢ of it on selling and admin, its biggest running cost.
Does it earn good returns?Low
Shareholders' money earned 1.2% a year, down from 29% in the year to Dec 2021.
Is it making cash?Thin
The business brought in $6.00M of cash from operations, 0.5% of sales, before capital spending, which the filer does not tag.
How steady is it?Swingy
Yearly sales growth has ranged from −20% to +54% over the last 5 years, with sales falling in 1 of them.
Are shares being diluted?Shrinking
The share count fell 22% in 4.5 years, and pay in shares costs 1.2% of sales.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-06. Fiscal years end in December.
Dec 2021
Dec 2022
Dec 2023
Dec 2024
Dec 2025
12 mo to Jun 2026
Size and growth
Sales
$1.28B
$1.33B
$1.36B
$1.08B
$1.16B
$1.22B
Sales growth
+54%
+3.7%
+2.4%
−20%
+6.9%
+16%
Profit
Gross margin
17%
9.5%
14%
9.0%
8.2%
8.2%
Net margin
13%
4.9%
5.1%
0.1%
−0.1%
0.7%
What growth costs, per sales dollar
Research and development
0.1%
0.1%
-
-
-
-
Selling, general and admin
6.0%
5.5%
6.2%
8.1%
8.1%
7.6%
Pay in shares
0.6%
0.7%
0.8%
1.3%
1.3%
1.2%
Cash
Cash from operations
$197M
$134M
$125M
$40.3M
$16.0M
$6.00M
Balance sheet
Cash and short-term investments
$260M
$257M
$281M
$241M
$157M
$109M
Debt
$44.9M
$20.4M
$13.2M
$5.40M
-
-
Net cash
$215M
$237M
$267M
$235M
-
-
Returns and shares
Shares (diluted)
55.0M
51.5M
47.8M
44.3M
41.9M
43.1M
What growth costs
Growth has not made the business more profitable lately. In 2025 sales rose 6.9% but prices fell and cash earnings slipped. One big mill has high fixed costs, so the arithmetic works hardest in reverse: in 2024 a 20% fall in sales took 62% off earnings before depreciation.
The evidence under this - 2 claims
C28inferencehigh confidence
Growth has not widened the margin lately: 2025's extra sales came with lower prices and adjusted EBITDA fell, and Q2 2026's 12% sales growth lifted adjusted EBITDA only 9% as energy and labour costs rose. The same fixed costs cut the other way in 2024, when a 20% fall in sales took 62% off earnings before depreciation.
derivedSales fell 20% in 2024 while pretax income plus depreciation fell 62% (C06); in 2025 sales rose 6.9% while adjusted EBITDA fell 2.7% as base prices fell $60.7M (C02, C03); in Q2 2026 sales rose 12% and adjusted EBITDA 9% (C04).
against this
Management expects August's price rises to be fully felt in 2027 and the new furnaces to lower costs (C07, C09), which would widen the margin on the same tons.
historical · FY 2023 to Q2 2026written 2026-10-06
C06facthigh confidence
Net sales were $1,282.9M in 2021, $1,329.9M in 2022, $1,362.4M in 2023, $1,084.0M in 2024 and $1,158.3M in 2025. Net income was $171.0M, $65.1M and $69.4M in 2021 to 2023. Pretax income plus depreciation was $155.4M in 2022, $153.3M in 2023, $58.7M in 2024 and $58.5M in 2025, and cash from operations fell from $125.3M in 2023 to $40.3M in 2024 and $16.0M in 2025.
2025's cash flow carried $62.0M of pension contributions that management says end in 2026 (C10), so cash from operations understates the business.
historical · FY 2021 to FY 2025written 2026-10-06
The last report (3 Aug)
Quarter ended June 2026, filed figures.
12%
Sales growth
against the same quarter a year earlier
10.6%
Growth from the quarter before
against 15.3% the quarter before that
In the second quarter of 2026, the three months to 30 June, sales rose 12% from a year earlier to $341.0M and adjusted EBITDA, a measure of cash earnings, was $29.0M. Defense sales hit a record $60.1M, and management said orders were up more than 50%.
The weak spot was the mill. It ran at 74% of its melting capacity, short of plan, which the chief executive put down mostly to shop floor execution and equipment reliability.
What it did to the thesisIt showed defense demand growing and orders building, which supports the case. It also showed the mill not yet turning those orders into the earnings the price assumes, which leaves the central question open.
The quarter in detail
0.4%Q3 25
-12.6%Q4 25
15.3%Q1 26
10.6%Q2 26
Sales growth from the previous quarter, filed figures. The company has restated its own history, so a quarter either side of the restatement may describe a different business; n/c marks one that does not compare.
Earnings per share $0.26 against $0.24 expected; $0.21 as filed, the gap being what the company adds back.
The evidence under this - 4 claims
C04facthigh confidence
In the June 2026 quarter net sales were $341.0M, up 12%, net income $8.9M, $0.21 a share, and adjusted EBITDA $29.0M, an 8.5% margin. Shipments were 174.2 thousand tons and the melt shop ran at 74% of capacity. Aerospace and defense sales were a record $60.1M on 20.0 thousand tons. Free cash flow was $7.1M, and minus $38.6M for the half year.
historical · Q2 2026 (quarter to 30 June 2026)written 2026-10-06
C05facthigh confidence
Adjusted EBITDA was $29.0M in the September 2025 quarter, $2.4M in December, when the company lost $14.3M, $24.6M in March 2026 and $29.0M in June: $85.0M over four quarters. Sales over the same four quarters were $1,222.5M, up 16% from $1,052.8M, net income $8.1M and cash from operations $6.0M.
Adjusted EBITDA excludes items the company chooses; the vendor's EBITDA for the same period is lower, about $68M, so the multiple on it is 11.4 rather than 9.2 (C22).
historical · four quarters to 30 June 2026written 2026-10-06
C08management claimmedium confidence
Management says the order book is up more than 50% from a year earlier, the industrial backlog has nearly doubled on construction and mining equipment, and aerospace and defense set records. It expects defense sales at a run rate of at least $250M a year by the end of 2026; an analyst put Q2 at about $240M. It won a multi-year hybrid transmission ring gear award starting production in 2028.
The chief executive also said defense timing is 'a little gray', set downstream by shell makers the company does not control (C29), and industrial shipments fell slightly in Q2.
current state · 2026-08-04written 2026-10-06
C09management claimhigh confidence
The chief executive said Q2's 74% melt rate fell short of plan partly because of power interruptions under an interruptible supply agreement, but more because of shop floor execution and maintenance reliability, which he called the biggest single cost opportunity.
The rate was still up on Q1, and the Army-funded furnaces commissioned in August are meant to lift throughput (C13), so the shortfall may already be narrowing.
current state · 2026-08-04written 2026-10-06
What management did with the money
Since 2022 Metallus has bought back about a quarter of its shares, settled its convertible bonds and paid off its debt. In 2025 it put $62.0M into its pension fund. The Army and Ohio paid for the new defense furnaces, so the expansion cost shareholders little.
Insiders in 2026Q3: 1 purchases and 0 sales, from their Form 4 filings.
The evidence under this - 2 claims
C11facthigh confidence
Diluted shares fell from 55.0M in 2021 to 41.9M in 2025 and stood at 43.1M over the four quarters to June 2026; management puts the cut since 2022 at 26%, 14M shares. Buybacks were $52.0M in 2022, $32.6M in 2023, $37.6M in 2024, $13.1M in 2025 and $3.6M in Q2 2026, with $81.8M of authority left. Pay in shares runs about $14M a year.
The trailing diluted count rose from 41.7M to 43.1M over the six months to June, as the return to profit counted more awards and the buyback slowed.
historical · FY 2021 to Q2 2026written 2026-10-06
C10facthigh confidence
At 30 June 2026 Metallus held $108.6M of cash and no borrowings, with a $300M asset-based credit line refinanced to June 2031 and $394.8M of liquidity. Pension and retiree medical liabilities on the balance sheet were $105.1M, after $62.0M of pension contributions in 2025; management expects none more in 2026. The Army's $99.75M and JobsOhio's $3.0M for the new furnaces have been received in full.
In short. Full. The price pays for earnings about 60% above today's, which needs both the defense growth and a better-run mill.
Share price
$21.04
close,
Company value for each $1 of cash profit
11.4
its 6-year normal 5.8
The shares rose 31% in six months, almost all of it because buyers now pay more for each dollar of sales, not because sales grew. The Defense Logistics Agency contract on 29 September added to the story.
This market has punished disappointments before: the shares fell by about a third after a soft outlook in 2024, and 16% in a day after a loss in February 2026. The next report, on 5 November 2026, shows whether the mill is catching up.
The evidence under this - 4 claims
C21facthigh confidence
Metallus closed at $21.04 on 5 October 2026, a market value of $875.8M and an enterprise value of $781.9M, near the top of its 52-week range of $14.19 to $22.58. Over 252 trading days the price rose 24.3%: sales per share rose 16.7% and the price paid per dollar of sales 6.6%. Over 126 days it rose 31.3%, of which sales per share was 2.1% and the multiple 28.6%.
The Defense Logistics Agency awarded Metallus a single-award, firm fixed-price contract for HF-1 steel with a five-year ordering period to 24 September 2031 and a ceiling of $995M, which the company says is not a commitment to buy. The first delivery order, about $125M, came on 29 September, with up to 24 months to fill each order. It was awarded without competition to keep a producer available for industrial mobilization, for about 438 million pounds of steel in 6.75-inch forged bars.
After the Q2 2024 release guided to lower shipments and lower defense volumes, the shares fell from $22.42 on 31 July 2024 to $14.50 on 10 September; Q3 2024 sales then fell 23%. After the Q4 2025 loss the shares fell 16% in a day, from $20.93 on 19 February 2026 to $17.58, and recovered to $21.04 by October.
historical · August 2024 to October 2026written 2026-10-06
C07management claimmedium confidence
Management expects September 2026 quarter adjusted EBITDA slightly above Q2's and Q3 2025's $29.0M, shipments similar to Q2 and a slightly higher melt rate, with a large maintenance outage in Q4. It raised prices in August by $60 a ton on bar and $100 to $160 on tube for the roughly 30% of the order book not on annual agreements, fully felt from 2027. Capital spending is about $70M in 2026, $35M of it government-funded.
Q2's melt rate fell short of plan for reasons management put on its own shop floor (C09), and Q4 2025's adjusted EBITDA was $2.4M (C05).
forwardwritten 2026-10-06
How we read the multiple
A buyer pays for a recovery that has not happened yet.
1. Over the last four quarters Metallus earned $85.0M of adjusted EBITDA.
2. The company is valued at about 9.2 times that.
3. Over six years buyers have usually paid about 6 times.
4. At 6 times, today's value needs about $135M, close to what it earned at the 2022 and 2023 peak.
Defense steel earns more per ton, which could deserve a higher price than the old cycle did, but it is still a sixth of sales.
Against its own history. Buyers pay well above the company's own normal for its cash earnings, at a time when those earnings are well below their last peak.
The evidence under this - 3 claims
C22inferencemedium confidence
At $21.04 the shares cost about 9.2 times trailing adjusted EBITDA and 15.9 times analysts' 2027 earnings. At its own six-year median of about 5.8 times, the enterprise value needs about $135M of EBITDA, about 60% above the trailing $85.0M and close to the 2022 and 2023 peak.
derivedEnterprise value of $781.9M (C21) over adjusted EBITDA of $85.0M (C05) is 9.2 times; the vendor's EV to EBITDA is 11.4 against a six-year median of 5.8 (S20). $781.9M over 5.8 is about $135M, against $155.4M and $153.3M of pretax income plus depreciation in 2022 and 2023 (C06). $21.04 over 2027 consensus EPS of $1.325 (C23) is 15.9 times, against a six-year median P/E of 8.6 (S20).
against this
Defense sales carry about 1.6 times the company's revenue per ton (C03) and are growing on government-funded assets, so a richer mix could earn a higher multiple than the old cycle's median.
forwardwritten 2026-10-06
C05facthigh confidence
Adjusted EBITDA was $29.0M in the September 2025 quarter, $2.4M in December, when the company lost $14.3M, $24.6M in March 2026 and $29.0M in June: $85.0M over four quarters. Sales over the same four quarters were $1,222.5M, up 16% from $1,052.8M, net income $8.1M and cash from operations $6.0M.
Adjusted EBITDA excludes items the company chooses; the vendor's EBITDA for the same period is lower, about $68M, so the multiple on it is 11.4 rather than 9.2 (C22).
historical · four quarters to 30 June 2026written 2026-10-06
C06facthigh confidence
Net sales were $1,282.9M in 2021, $1,329.9M in 2022, $1,362.4M in 2023, $1,084.0M in 2024 and $1,158.3M in 2025. Net income was $171.0M, $65.1M and $69.4M in 2021 to 2023. Pretax income plus depreciation was $155.4M in 2022, $153.3M in 2023, $58.7M in 2024 and $58.5M in 2025, and cash from operations fell from $125.3M in 2023 to $40.3M in 2024 and $16.0M in 2025.
2025's cash flow carried $62.0M of pension contributions that management says end in 2026 (C10), so cash from operations understates the business.
historical · FY 2021 to FY 2025written 2026-10-06
Priced against its rivals
None of the listed rivals above sells the same thing to the same buyers as a large part of what it does. Steel Dynamics, Nucor, Gerdau and Tenaris do too, but as a small part of much bigger companies, so their price says little about this one. A price comparison needs at least two, so the price is judged against its own history instead.
Private or foreign rivals that cannot be priced: Scot Forge, Frisa, TMK Group.
Where we disagree with the market
The market believes
A defense steel winner, with a sole-source contract and Army-funded furnaces that make this a munitions growth story.
We believe
Defense is real but a sixth of sales, and the price already assumes it lifts earnings 60% through a mill that is still under-running.
The contract's ceiling is not a commitment, and Metallus already sold this steel to shell makers before the agency bought directly, so some new orders may replace old ones. The mill is also still short of plan.
Against us: orders are up more than 50%, the industrial backlog has nearly doubled and price rises take full effect in 2027, so earnings may already be turning faster than last year's figures show.
What analysts say, and the evidence
Analysts positive
50%
of 2, 1 Oct
Four months earlier
50%
of 2, 1 Jun
The evidence under this - 5 claims
C14facthigh confidence
The Defense Logistics Agency awarded Metallus a single-award, firm fixed-price contract for HF-1 steel with a five-year ordering period to 24 September 2031 and a ceiling of $995M, which the company says is not a commitment to buy. The first delivery order, about $125M, came on 29 September, with up to 24 months to fill each order. It was awarded without competition to keep a producer available for industrial mobilization, for about 438 million pounds of steel in 6.75-inch forged bars.
The DLA ceiling prices HF-1 bar at about $5,000 a ton, against $2,887 for the company's defense sales in 2025, and its tonnage, about 40 thousand tons a year, is two thirds of 2025's defense tons. The first $125M order, filled over up to two years, is worth about $62M a year, about two fifths of 2025's defense sales.
derived$995M over about 438 million pounds, about 199 thousand tons (C14), is about $5,000 a ton; $125M over 24 months (C14) against 2025 defense sales of $161.4M (C03).
against this
The ceiling is not a commitment (C14), and Metallus already sold HF-1 billets to shell makers as a subcontractor (S12), so some DLA steel may replace orders it would have had anyway.
forwardwritten 2026-10-06
C09management claimhigh confidence
The chief executive said Q2's 74% melt rate fell short of plan partly because of power interruptions under an interruptible supply agreement, but more because of shop floor execution and maintenance reliability, which he called the biggest single cost opportunity.
The rate was still up on Q1, and the Army-funded furnaces commissioned in August are meant to lift throughput (C13), so the shortfall may already be narrowing.
current state · 2026-08-04written 2026-10-06
C22inferencemedium confidence
At $21.04 the shares cost about 9.2 times trailing adjusted EBITDA and 15.9 times analysts' 2027 earnings. At its own six-year median of about 5.8 times, the enterprise value needs about $135M of EBITDA, about 60% above the trailing $85.0M and close to the 2022 and 2023 peak.
derivedEnterprise value of $781.9M (C21) over adjusted EBITDA of $85.0M (C05) is 9.2 times; the vendor's EV to EBITDA is 11.4 against a six-year median of 5.8 (S20). $781.9M over 5.8 is about $135M, against $155.4M and $153.3M of pretax income plus depreciation in 2022 and 2023 (C06). $21.04 over 2027 consensus EPS of $1.325 (C23) is 15.9 times, against a six-year median P/E of 8.6 (S20).
against this
Defense sales carry about 1.6 times the company's revenue per ton (C03) and are growing on government-funded assets, so a richer mix could earn a higher multiple than the old cycle's median.
forwardwritten 2026-10-06
C08management claimmedium confidence
Management says the order book is up more than 50% from a year earlier, the industrial backlog has nearly doubled on construction and mining equipment, and aerospace and defense set records. It expects defense sales at a run rate of at least $250M a year by the end of 2026; an analyst put Q2 at about $240M. It won a multi-year hybrid transmission ring gear award starting production in 2028.
The chief executive also said defense timing is 'a little gray', set downstream by shell makers the company does not control (C29), and industrial shipments fell slightly in Q2.
current state · 2026-08-04written 2026-10-06
06
What could go wrong, and how we would know
The risks
The cycle turns Most sales go to car and equipment makers; in 2024 a 20% fall in sales cut earnings before depreciation by 62%.
One site All steel is made in Canton, so a furnace failure or a strike stops the whole company.
A second shell steel source If the Army approves another mill for shell steel, the protected part of the business shrinks.
Budgets decide defense demand Shell orders depend on government spending and on shell makers downstream, which management says it cannot see clearly.
The pension Pension and retiree medical liabilities of $105.1M come ahead of shareholders, and contributions may resume after 2026.
The mill under-runs Melting ran short of plan in the last quarter, mostly on the company's own execution and equipment reliability.
The evidence under this - 6 claims
C06facthigh confidence
Net sales were $1,282.9M in 2021, $1,329.9M in 2022, $1,362.4M in 2023, $1,084.0M in 2024 and $1,158.3M in 2025. Net income was $171.0M, $65.1M and $69.4M in 2021 to 2023. Pretax income plus depreciation was $155.4M in 2022, $153.3M in 2023, $58.7M in 2024 and $58.5M in 2025, and cash from operations fell from $125.3M in 2023 to $40.3M in 2024 and $16.0M in 2025.
2025's cash flow carried $62.0M of pension contributions that management says end in 2026 (C10), so cash from operations understates the business.
historical · FY 2021 to FY 2025written 2026-10-06
C12facthigh confidence
One customer was 10.6% of 2025 sales and the ten largest about half. All steel is made in Canton, where about 1,200 of 1,865 employees, 61.9%, belong to United Steelworkers Local 1123 under a contract to 30 September 2029. Most sales carry a surcharge passing scrap and alloy costs through with a lag.
No second qualified US source of HF-1 was found: the government has chosen to fund and contract with one mill rather than qualify another. That protection is a government choice and a qualification, not a physical barrier, since three larger US mills already roll bars of the size.
derivedThe DLA justified a sole-source award on industrial mobilization (C14), the Army describes Metallus as the continuous HF-1 producer since 1993 (C13), and no rival's filing mentions the steel (C19). The Army has paid to bring new metal parts makers in when it needed more (C15).
against this
The Army paid to bring a new metal parts maker into Mesquite, Texas when it needed more shells (C15), so it does fund second sources when supply falls short; the chief executive also says new entrants are coming into munitions (C29).
current state · 2026-10-06written 2026-10-06
C29management claimhigh confidence
Asked about 2027 defense revenue, the chief executive said much downstream of a materials supplier is out of its control, that munitions makers are running harder and new entrants are coming, that the picture will be clearer at annual contract talks early in 2027, and that it is 'a little gray right now'.
The Inspector General's report has the Army planning to multiply metal parts output fivefold by September 2026 (C15), which makes demand look more visible than 'a little gray'.
current state · 2026-08-04written 2026-10-06
C10facthigh confidence
At 30 June 2026 Metallus held $108.6M of cash and no borrowings, with a $300M asset-based credit line refinanced to June 2031 and $394.8M of liquidity. Pension and retiree medical liabilities on the balance sheet were $105.1M, after $62.0M of pension contributions in 2025; management expects none more in 2026. The Army's $99.75M and JobsOhio's $3.0M for the new furnaces have been received in full.
The chief executive said Q2's 74% melt rate fell short of plan partly because of power interruptions under an interruptible supply agreement, but more because of shop floor execution and maintenance reliability, which he called the biggest single cost opportunity.
The rate was still up on Q1, and the Army-funded furnaces commissioned in August are meant to lift throughput (C13), so the shortfall may already be narrowing.
current state · 2026-08-04written 2026-10-06
What we still do not know
How much of the agency's steel is new demand, and how much replaces steel Metallus would have sold to shell makers anyway.
Exactly how much steel each shell takes; no published bill of materials was found.
How large the US market for special steel bars is, and what share Metallus holds.
Who the customer is that bought 10.6% of 2025 sales.
The evidence under this - 3 claims
C18inferencemedium confidence
The DLA ceiling prices HF-1 bar at about $5,000 a ton, against $2,887 for the company's defense sales in 2025, and its tonnage, about 40 thousand tons a year, is two thirds of 2025's defense tons. The first $125M order, filled over up to two years, is worth about $62M a year, about two fifths of 2025's defense sales.
derived$995M over about 438 million pounds, about 199 thousand tons (C14), is about $5,000 a ton; $125M over 24 months (C14) against 2025 defense sales of $161.4M (C03).
against this
The ceiling is not a commitment (C14), and Metallus already sold HF-1 billets to shell makers as a subcontractor (S12), so some DLA steel may replace orders it would have had anyway.
forwardwritten 2026-10-06
C16inferencemedium confidence
Each 155mm metal part takes about 0.056 tons, 56 kilograms, of HF-1 steel, a little more than the 47 kilograms a finished, filled shell weighs.
The 6,720 tons figure comes from trade reports of the Army agreement rather than the Army's own page, and some of that capacity serves rockets and bombs (C13).
current state · 2026-09-02written 2026-10-06
C12facthigh confidence
One customer was 10.6% of 2025 sales and the ten largest about half. All steel is made in Canton, where about 1,200 of 1,865 employees, 61.9%, belong to United Steelworkers Local 1123 under a contract to 30 September 2029. Most sales carry a surcharge passing scrap and alloy costs through with a lag.
Neutral→AttractiveA cheaper price on today's earnings
It needs:
○The shares fall to 6.5 times the last four quarters' cash earnings, from about 9.2 today.about ≈$14.78 today, 30% below the last close
Neutral→AttractiveEarnings catch up with the price
It needs all of:
○Cash earnings pass $35M in each of two quarters in a row.checked at the next results, due by 5 Nov
○Defense sales reach $62.5M a quarter, a pace of $250M a year.checked at the next results, due by 5 Nov
Neutral→UnattractiveDefense growth proves thinner than it looks
It needs any of:
○Defense sales fall below $50M in a quarter.checked at the next results, due by 5 Nov
○Management says the agency's steel replaces orders shell makers would otherwise have placed.checked at the next results, due by 5 Nov
We would also be wrong if
The agency orders nothing beyond the first $125M by the end of 2027.
Melting stays below 75% of capacity through June 2027.
The Army or the agency approves a second US source of shell steel.
What is coming
5 November 2026 Q3 2026 results: Whether adjusted EBITDA passes $29.0M, the melt rate rises above 74%, and what the DLA order adds to 2027.
Every dated event ahead
5 November 2026 Q3 2026 results: Whether adjusted EBITDA passes $29.0M, the melt rate rises above 74%, and what the DLA order adds to 2027.
1 January 2027 Kristopher Westbrooks becomes chief executive: Whether the new chief executive sets targets for the mill's reliability and the defense run rate.
28 February 2027 Q4 2026 results and annual contract talks: 2027 prices on the 70% of orders under annual agreements, and the clearer 2027 defense picture management promised.
Since we wrote this
Written
6 Oct
Price the thesis read
$21.04
5 Oct
6 OctThesis writtenNeutral, medium convictionWritten a week after the DLA's $995M sole-source contract, with the shares up 31% in six months, mostly on a higher multiple.
Sources 26
Where this came from
Sources - 26
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
products, plants and capacity, end markets by tons and sales, base sales per ton, customer concentration, the union contract, the named competitors, the Army agreement, the pension and the FY2025 statements
the balance sheet, pension and postretirement liabilities, the refinanced credit line and the Army funding received
backsC04C10
S05primarytranscript2026-08-04
Metallus Q2 2026 earnings call transcript (FMP), held 4 August 2026
the order book, the industrial backlog, the $250M defense run-rate target, the ring gear award, the melt shortfall and its causes, and the share of the order book on annual agreements
We also continue to benefit from healthy demand across our end markets with the order book up over 50% year-over-year, providing strong visibility heading into the second half of the year.
the 36,000 a month production rate, the 100,000 goal, metal parts as the limiting factor, the three metal parts plants and Mesquite's failure, and the 3.6 million round drawdown
According to CPE A&E officials, as of March 2026, the production rate is 36,000 rounds per month, or 432,000 rounds per year.
the sole-source basis of the award from the Defense Department's contract announcement, Metallus's role as a billet subcontractor, and the 1,500 to 6,720 tons a month expansion
The agency awarded it without competition under a federal rule that allows sole-source deals to keep a producer available for industrial mobilization or a national emergency.
the statutory basis, the end date of 24 September 2031, no options, the funding years, and the capacity in tons a month
In February 2024, the Army signed an agreement worth up to $99 million, funded through Ukraine supplemental appropriations, that raised the plant's HF-1 output from 1,500 tons a month to 6,720 tons a month.
what an HF-1 shell weighs once finished and filled
The M795 is a 155mm high fragmentation steel (HF1) body projectile filled with 23.8 pounds (10.8kg) of TNT or IMX-101 and weighing approximately 103 pounds (47 kg).
that its seamless tubes are sold mainly to the oil and gas industry
backsC19
S20secondaryvendor data2026-10-05
Research pack (FMP market data, FINRA, SEC filed figures), frozen as research-pack.json
price, range and the price move split, the multiples against their own six-year medians, analyst estimates and the rating series, short interest, insider trades and the earnings reactions