Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to Metallus' First Quarter 2025 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I will now turn the call over to Jennifer Beeman. Please go ahead.

Good morning, and welcome to Metallus' first quarter 2025 conference call. I'm Jennifer Beeman, Director of Communications and Investor Relations for Metallus. Joining me today is Mike Williams, President and Chief Executive Officer; Kris Westbrooks, Executive Vice President and Chief Financial Officer; and Kevin Raketich, Executive Vice President and Chief Commercial Officer. You all should have received a copy of our press release, which was issued last night. During today's conference call, we may make forward-looking statements as defined by the SEC. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in yesterday's release. Please refer to our SEC filings, including our most recent Form 10-K and Form 10-Q and the list of factors included in our earnings release, all of which are available on the Metallus website. Where non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are also included in the earnings release. With that, I'd like to turn the call over to Mike. Mike?

Good morning, and we appreciate you joining us today. First, let me say that I'm encouraged by the growing demand for domestic steel and Metallus is well-positioned to capitalize on this momentum. Our solid order book, strengthening spot pricing and recent market share gains reflect the confidence our customers have in us and the resilience of our business strategy. Over the past several months, the trade environment has been widely discussed. We fully support the enforcement and expansion of steel tariffs. As long time advocates, we believe these measures align with our commitment to fair trade and balancing excessive global overcapacity. This evolving trade environment will help us meet the growing demand for U.S. produced steel. As consumption of domestically produced steel increases, we are seeing a rise in our order bookings from new customers and existing customers. Consequently, our order backlog has increased approximately 50% from the same period a year ago. At the same time, we are mindful of the potential challenges posed by the current macroeconomic uncertainty. That said, we are well-positioned as a U.S. business with a strong balance sheet and continued focus on cost management. We remain focused on execution and the factors within our control in order to deliver value to our stakeholders. Switching gears to safety. Our mission is to be recognized as having the safest specialty metals operation in the world. In 2025, we plan to invest approximately $5 million to further strengthen our safety management system and upgrade equipment. I'm pleased that our past safety investments are yielding results. To date, in 2025, we have seen a year-over-year improvement in all safety metrics. Two key areas of focus; lockout/tagout/tryout and zero incident planning are exceeding our target rates, thanks to the commitment of our employees, continuous training and supervisory oversight. We…

Thanks, Mike. Good morning, and thank you for joining our first quarter earnings call. I'm pleased that we started off the year with a sequential improvement in shipments, net sales and profitability. We continue to invest in the business while also maintaining a strong balance sheet. From a financial results perspective, first quarter net sales totaled $280.5 million, a sequential increase of $40 million or 17%. The increase in net sales was primarily driven by higher shipments of 22,700 tons, with increases across all end markets, except aerospace and defense, or A&D for short. Although, A&D shipments declined on a sequential basis during the first quarter, driven by customer start-up delays, we expect shipments to A&D customers to increase during the second quarter and demand to remain strong for the foreseeable future. Net income in the first quarter was $1.3 million, or $0.03 per diluted share. On an adjusted basis, net income for the quarter was $3.2 million, or $0.07 per diluted share. Adjusted EBITDA was $17.7 million in the first quarter, a sequential increase of $9.4 million. In addition to the previously discussed 17% increase in first quarter shipments, manufacturing costs declined by $12.5 million on a sequential basis. The improvement in manufacturing costs was driven by increased cost absorption on higher production volume, as well as lower planned annual maintenance shutdown costs. Additionally, the team continues to carefully manage their costs and drive operational efficiencies. Also contributing to the higher adjusted EBITDA was an increase in the raw material surcharge revenue per ton as a result of higher scrap and alloy prices. Partially offsetting these items was unfavorable price/mix during the quarter, driven by a variety of factors, including lower base prices, as well as a higher mix of automotive and distribution shipments, combined with lower A&D shipments.…

[Operator Instructions] Your first question comes from Samuel McKinney with KeyBanc Capital Markets.

Hi. Good morning.

Good morning, Sam.

1Q '25 shipments up about 17% sequentially, a strong figure, well ahead of normal seasonality. We've been hearing a lot about pull forward demand to get ahead of tariffs during this earnings cycle. And I was curious, if you could frame up how much of that volume boost has to do with that dynamic?

Very little actually because -- for Q1, because most of those orders were placed in Q4 and the tariffs didn't really go in effect until April. So there was -- in that shipment, increase was very little -- actually none trying to hedge the tariffs. It really was market share gains that we achieved in negotiations for 2025 and increasing spot buys from distributors restocking their inventory after year end.

Okay. That's helpful. And then, Mike, you touched on this earlier, but I wanted to dig in more. I know the energy market has been heavily affected by imports, but you had solid volume momentum in the first quarter. Could you talk about what you're hearing from customers in that segment and what sort of cadence you're looking for in the months ahead?

Yeah. I mean, our expectation is that our energy product demand will continue to increase as that industry or end market is really trying to source domestically because they have been historically heavy importers. There is still a little bit of inventory – foreign import overhang down in some of the Houston area. And as that’s getting worked off, we continue to expect our order book demand from our energy customers and new customers to continue to increase.

Okay. I appreciate it. Thank you.

Thank you, Sam.

[Operator Instructions] Your next question comes from Dave Storms with Stonegate.

Good morning, guys.

Good morning.

Within the A&D, are there additional details you can give us on the customer manufacturing start-up challenges?

Yeah. So, you have a new facility that's been constructed. And that facility going through the commissioning process ran into difficulties. I'm not going to get into the details even though we're quite aware of the details because I don't want to speak for someone else. But as they overcome, they kind of rebooted their commissioning process and our understanding is progress is being made. And later this year, we should start to see that new facility begin to order from us, and we look forward to that. However, we've also gotten a number of new inquiries from -- not only within the United States, but outside of the United States for our uniquely positioned munition grades that we make. So, we're pretty excited about that. And then we've also won a number of other, what I would call, military applications, and those will begin to ramp up in the second half of the year. That's a variety from gun barrels to different types of, I guess, I call them missiles. So, we're pretty excited about the progress we're making. We've got new customers. We've got new applications. The Vacuum Arc Remelt products that we are now promoting and selling, we've gotten significant orders. And we're working through a number of qualifications with new customers to ramp up our sales in that area, and we're highly confident of meeting our interim target of over $30 million of new sales in those product lines.

All right. Thank you. And then, how do you feel about current production capacity given the strengthening order book?

We have plenty of capacity.

Got it. Thank you.

There are no further questions at this time. I'll now turn the call back over to Jennifer Beeman for closing remarks.

Great. Thank you, everyone, for joining us and that concludes our call today.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect.