Metallus Turns the Corner: AS9100D and Price Hikes Signal a Stronger 2027
Q2 EBITDA +9% YoY, order book +50%, A&D run rate on track, and new pricing power set the stage for margin expansion.
MTUS · Earnings Call · 2026-08-04
Q2 Results: Momentum in the Order Book and Profitability
Metallus's second-quarter 2026 results delivered exactly what management had promised: a step-up in profitability. As CEO Mike Williams stated in his opening remarks, "Increased shipments, higher melt utilization, improved pricing and product mix and solid operating performance drove the improvement." “Increased shipments, higher melt utilization, improved pricing and product mix and solid operating performance drove the improvement.” — Michael Williams, Chief Executive Officer · 2026-08-04 The company reported adjusted EBITDA of $29 million, up 9% year-over-year, and net sales of $341 million, up 12%. More importantly, the order book is now up over 50% year-over-year, providing strong visibility into the back half. The industrial backlog has nearly doubled, and lead times have extended into late Q4, signaling robust demand across the board.
The improvement in profitability came despite a 74% melt utilization rate that fell slightly short of plan due to power interruptions and maintenance reliability. Still, the sequential and year-over-year gains were driven by volume, pricing, and mix, and the company guided Q3 adjusted EBITDA to be slightly higher sequentially and year-over-year. This is a notable contrast to the prior-year trough, when operating margins were deeply negative.
Aerospace & Defense: Certification and Scaling
A key highlight was the aerospace & defense (A&D) segment, where the company achieved record shipment tons and sales in the quarter, and importantly, earned its AS9100D certification. This quality standard, widely recognized in the industry, opens doors to new customers and mission-critical applications. Mike Williams confirmed the target for the A&D annual revenue run rate: "our expectation is that we'll achieve that $250 million, at least that $250 million run rate by the end of this year." “our expectation is that we'll achieve that $250 million, at least that $250 million run rate by the end of this year.” — Michael Williams, Chief Executive Officer · 2026-08-04 This is a continuation of prior guidance—earlier this year, management expressed confidence in hitting that run-rate by mid-2026, and now the goalpost has moved to year-end but remains intact.
We're very confident that we'll hit at least that $250 million run rate by mid-2026.
That prior call, from February 2025, underscored the enduring demand from defense customers. The Q2 growth was fueled by a combination of 155mm munitions demand, new program awards, and the ramp of new capacity downstream. As these programs scale, the certification will be a key enabler to broaden the customer base.
Pricing Power and the Path to 2027
Perhaps the biggest strategic signal in the call was the announcement of price increases for spot customers—$60/ton on bar, $100/ton on carbon seamless mechanical tubing, and $160/ton on alloy seamless mechanical tubing products. Management explained that the full run-rate benefit will materialize in 2027, as annual contracts reset. When asked about customer receptivity, Mike Williams was circumspect but optimistic: "All the negotiations with our customers are held in high confidence. So we really don't discuss publicly how those are going… It does establish a starting point or a base of price negotiations for 2027, which tends to be positive in that nature." “It does establish a starting point or a base of price negotiations for 2027, which tends to be positive in that nature.” — Michael Williams, Chief Executive Officer · 2026-08-04 This marks a shift from the prior year, when pricing was largely flat. The company is also benefiting from a broader trade environment that favors domestic sourcing—a theme echoed in the global keyword trajectory around net tariff refunds, as tariffs reshape supply chains in steel and other industries.
End Markets and Execution
Automotive shipments rose 12% sequentially and 8% year-over-year, driven by SUV and light-truck platforms, and the company secured a new multi-year award for ring gears on a hybrid transmission platform. Industrial demand, while slightly down in the quarter, remains strong with the backlog nearly doubling. Energy is cautiously improving, aided by a slight uptick in drilling and the tariff environment. As Mike Williams put it, "we are seeing improvement in demand and opportunities in Energy. That's heavily being influenced by a slight increase in the number of drilling activity in the United States and also the trade tariff environment helps us in that regard." “we are seeing improvement in demand and opportunities in Energy. That's heavily being influenced by a slight increase in the number of drilling activity in the United States and also the trade tariff environment helps us in that regard.” — Michael Williams, Chief Executive Officer · 2026-08-04
The company's fundamentals provide context: Operating margin improved to 2.6% in Q1 2026, a sharp recovery from the negative trough of 2025, though still far below the 18% peak seen in 2022. The recent price increases and capacity investments should support further margin expansion. With a strong balance sheet—no borrowings and $395 million in liquidity—Metallus is positioned to execute its strategic initiatives and deliver on its promise of increased profitability each quarter.
Execution remains the key variable. Management acknowledged that melt utilization fell short of plan, but the commissioning of the bloom reheat furnace and the upcoming roller furnace are expected to drive operational improvements. As the company celebrates these investments with a ribbon-cutting ceremony and looks to 2027, the combination of pricing power, a diversified order book, and a renewed focus on high-value markets like A&D could indeed mark a turning point for Metallus.