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Financing Arrangements | 9 Months Ended
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Sep. 30, 2024
Debt Disclosure [Abstract] |
Financing Arrangements | Note 8 - Financing Arrangements For a detailed discussion of the Company's long-term debt and credit arrangements, refer to “Note 14 - Financing Arrangements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The following table summarizes the current and non-current debt as of September 30, 2024 and December 31, 2023:
|  | September 30, 2024 |  |  | December 31, 2023 |
Credit Agreement |  | $ | — |  |  | $ | — |
Convertible Senior Notes due 2025 |  |  | 13.2 |  |  |  | 13.2 |
Total debt |  | $ | 13.2 |  |  | $ | 13.2 |
Less current portion of debt |  |  | 13.2 |  |  |  | 13.2 |
Total non-current portion of debt |  | $ | — |  |  | $ | — |
Amended Credit Agreement On September 30, 2022, the Company, as borrower, and certain domestic subsidiaries of the Company, as subsidiary guarantors (the “Subsidiary Guarantors”), entered into a Fourth Amended and Restated Credit Agreement (the “Amended Credit Agreement”), with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and the lenders party thereto (collectively, the “Lenders”), which further amended and restated the Company’s existing secured Third Amended and Restated Credit Agreement, dated as of October 15, 2019. As of September 30, 2024, the amount available under the Amended Credit Agreement was $242.2 million, reflective of the Company’s asset borrowing base with no outstanding borrowings. Additionally, the Company is in compliance with all covenants outlined in the Amended Credit Agreement. Convertible Senior Notes due 2025 The principal amount of the Convertible Senior Notes due 2025 upon issuance was $46.0 million. Transaction costs related to the Convertible Senior Notes due 2025 incurred upon issuance were $1.5 million. These costs are amortized to interest expense over the term of the notes. The Convertible Senior Notes due 2025 mature on December 1, 2025. The Convertible Senior Notes due 2025 are convertible at the option of holders in certain circumstances and during certain periods into the Company’s common shares, cash, or a combination thereof, at the Company’s election. The Indenture for the Convertible Senior Notes due 2025 provides that notes will become convertible during a quarter when the share price for 20 trading days during the final 30 trading days of the immediately preceding quarter was greater than 130% of the conversion price. This criterion was met during the third quarter of 2024 and as such the notes can be converted at the option of the holders beginning October 1 through December 31, 2024. Whether the notes will be convertible following such period will depend on if this criterion, or another conversion condition, is met in the future. As such, the Convertible Senior Notes due 2025 are classified as a current liability in the Consolidated Balance Sheets as of September 30, 2024. This criterion was also met as of December 31, 2023. To date, no holders have elected to convert their notes during any optional conversion periods. For details regarding all conversion mechanics and methods of settlement, refer to the Indenture for the Convertible Senior Notes due 2025 filed as an exhibit to a Form 8-K on December 15, 2020 and incorporated by reference in our most recent 10-K filing. In the first quarter of 2023, the Company repurchased a total of $7.5 million aggregate principal amount of its Convertible Senior Notes due 2025. Total cash paid to noteholders was $18.7 million. A loss on extinguishment of debt of $11.4 million was recognized, including a charge of $0.2 million for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs. The components of the Convertible Senior Notes due 2025 as of September 30, 2024 and December 31, 2023 were as follows:
|  | September 30, 2024 |  |  | December 31, 2023 |
Principal |  | $ | 13.3 |  |  | $ | 13.3 |
Less: Debt issuance costs, net of amortization |  |  | (0.1 | ) |  |  | (0.1 | )
Convertible Senior Notes due 2025, net |  | $ | 13.2 |  |  | $ | 13.2 |
The following table sets forth interest expense recognized specifically related to the Convertible Notes:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Contractual interest expense |  | $ | 0.2 |  |  | $ | 0.2 |  |  | $ | 0.6 |  |  | $ | 0.7 |
Amortization of debt issuance costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 0.1 |
Total |  | $ | 0.2 |  |  | $ | 0.2 |  |  | $ | 0.6 |  |  | $ | 0.8 |
The total cash interest paid for the nine months ended September 30, 2024 and 2023 wa s $1.3 million, respectively. Fair Value Measurement The fair value of the Convertible Senior Notes due 2025 was approximately $19.9 million as of September 30, 2024.The fair value of the Convertible Senior Notes due 2025, which falls within Level 2 of the fair value hierarchy as defined by applicable accounting guidance, is based on a valuation model primarily using observable market inputs and requires a recurring fair value measurement on a quarterly basis. Metallus’ Credit Facility is variable-rate debt. As such, any outstanding carrying value is a reasonable estimate of fair value as interest rates on these borrowings approximate current market rates. This valuation falls within Level 2 of the fair value hierarchy and is based on quoted prices for similar assets and liabilities in active markets that are observable either directly or indirectly. There were no outstanding borrowings on the Credit Facility as of September 30, 2024. Interest (Income) Expense, net The following table provides the components of interest (income) expense, net for the three and nine months ended September 30, 2024 and 2023:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Interest expense |  | $ | 0.7 |  |  | $ | 0.6 |  |  | $ | 2.0 |  |  | $ | 1.9 |
Interest income |  |  | (3.1 | ) |  |  | (2.4 | ) |  |  | (9.6 | ) |  |  | (6.9 | )
Interest (income) expense, net |  | $ | (2.4 | ) |  | $ | (1.8 | ) |  | $ | (7.6 | ) |  | $ | (5.0 | )
Interest income primarily relates to interest earned on cash invested in a money market fund and deposits with financial institutions. As of September 30, 2024, the carrying value of the Company's money market investment was $125.9 million, which approximates the fair value. The Company had $96.2 million in cash invested in a money market fund as of September 30, 2023. The money market fund is a cash equivalent and is included in cash and cash equivalents on the Consolidated Balance Sheets. The fund consists of highly liquid investments with an average maturity of three months or less and falls within Level 1 of the fair value hierarchy as defined by applicable accounting guidance. Additionally, as of September 30, 2024 and 2023, the Company has $124.1 and $118.5 million, respectively, of cash held in other accounts which generate interest income at a rate similar to the money market fund. Treasury Shares On December 20, 2021 Metallus announced that its Board of Directors authorized a share repurchase program under which the Company may repurchase up to $50.0 million of its outstanding common shares. On November 2, 2022, the Board of Directors authorized an additional $75.0 million towards its share repurchase program and on May 6, 2024 the Board of Directors authorized an additional $100.0 million. The share repurchase program is intended to return capital to shareholders while also offsetting dilution from annual equity compensation awards. The share repurchase program does not require the Company to acquire any dollar amount or number of shares and may be modified, suspended, extended or terminated by the Company at any time without prior notice. These authorizations reflect the continued confidence of the Board and senior leadership in the Company’s ability to generate sustainable through-cycle profitability while maintaining a strong balance sheet and cash flow. For the three months ended September 30, 2024, the Company repurchased approximately 1.2 million common shares in the open market at an aggregate cost of $20.1 million, which equates to an average repurchase price of $17.29 per share. For the nine months ended September 30, 2024, the Company repurchased approximately 1.8 million common shares in the open market at an aggregate cost of $34.1 million, which equates to an average repurchase price of $18.82 per share. As of September 30, 2024, the Company had a balance of $106.3 million remaining on its authorized share repurchase program. For the three months ended September 30, 2023, the Company repurchased approximately 0.4 million common shares in the open market at an aggregate cost of $7.7 million, which equates to an average repurchase price of $21.82 per share. For the nine months ended September 30, 2023, the Company repurchased approximately 1.5 million common shares in the open market at an aggregate cost of $28.5 million, which equates to an average repurchase price of $18.81 per share.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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