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Financing Arrangements | 12 Months Ended
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Dec. 31, 2024
Debt Disclosure [Abstract] |
Financing Arrangements | Note 11 - Financing Arrangements The following table summarizes the current and non-current debt as of December 31, 2024 and 2023:
|  | December 31, |
|  | 2024 |  |  | 2023 |
Credit Agreement |  | $ | — |  |  | $ | — |
Convertible Senior Notes due 2025 |  |  | 5.4 |  |  |  | 13.2 |
Total debt |  | $ | 5.4 |  |  | $ | 13.2 |
Less current portion of debt |  |  | 5.4 |  |  |  | 13.2 |
Total non-current portion of debt |  | $ | — |  |  | $ | — |
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 secured Third Amended and Restated Credit Agreement, dated as of October 15, 2019. The Amended Credit Agreement provides for a $400.0 million asset-based revolving credit facility (the “Credit Facility”), including a $15.0 million sublimit for the issuance of commercial and standby letters of credit and a $40.0 million sublimit for swingline loans. Pursuant to the terms of the Amended Credit Agreement, the Company is entitled, on up to two occasions and subject to the satisfaction of certain conditions, to request increases in the commitments under the Amended Credit Agreement in the aggregate principal amount of up to $100.0 million, to the extent that existing or new lenders agree to provide such additional commitments. In addition to and independent of any increase described in the preceding sentence, the Company is entitled, subject to the satisfaction of certain conditions, to request a separate “first-in, last-out” tranche (the “Incremental FILO Tranche”) in an aggregate principal amount of up to $30.0 million with a separate borrowing base and interest rate margins, in each case, to be agreed upon among the Company, the Administrative Agent and the Lenders providing the Incremental FILO Tranche. The availability of borrowings under the Credit Facility is subject to a borrowing base calculation based upon a valuation of the eligible accounts receivable, inventory and machinery and equipment of the Company and the Subsidiary Guarantors, each multiplied by an applicable advance rate. The availability of borrowings may be further modified by reserves established from time to time by the Administrative Agent in its permitted discretion. The interest rate per annum applicable to loans under the Credit Facility will be, at the Company’s option, equal to either (i) the Alternate Base Rate (as defined in the Amended Credit Agreement) plus the applicable margin or (ii) the Adjusted Term SOFR Rate (as defined in the Amended Credit Agreement) plus the applicable margin. The applicable margin will be determined by a pricing grid based on the Company’s average quarterly availability. The Alternate Base Rate is subject to a 1.00% floor, and the Adjusted Term SOFR Rate is subject to a 0.00% floor. In addition, the Company will pay a 0.25% per annum commitment fee on the average daily unused amount of the Credit Facility. The Credit Facility may be used to finance working capital, capital expenditures, certain permitted acquisitions and for other general corporate purposes. All of the indebtedness under the Credit Facility is guaranteed by the Company’s material domestic subsidiaries, as well as any other domestic subsidiary that the Company elects to make a party to the Amended Credit Agreement, and is secured by substantially all of the personal property of the Company and the Subsidiary Guarantors. The Credit Facility matures on September 30, 2027. Prior to the maturity date, amounts outstanding are required to be repaid (without reduction of the commitments thereunder) from mandatory prepayment events from the proceeds of certain asset sales, equity or debt issuances or casualty events. The Amended Credit Agreement contains certain customary covenants, including covenants that limit the ability of the Company and its subsidiaries to, among other things, (i) incur or suffer to exist certain liens, (ii) make investments, (iii) incur or guaranty additional indebtedness (iv) enter into consolidations, mergers, acquisitions, sale-leaseback transactions and sales of assets, (v) make distributions and other restricted payments, (vi) change the nature of its business, (vii) engage in transactions with affiliates and (viii) enter into restrictive agreements, including agreements that restrict the ability to incur liens or make distributions. In addition, the Amended Credit Agreement requires the Company to maintain a minimum specified fixed charge coverage ratio on a springing basis if minimum availability requirements as specified in the Amended Credit Agreement are not maintained. The Amended Credit Agreement contains certain customary events of default. If any event of default occurs and is continuing, the Lenders would be entitled to take various actions, including the acceleration of amounts due under the Amended Credit Agreement, and exercise other rights and remedies. As of December 31, 2024, the amount available under the Amended Credit Agreement was $217.9 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 Convertible Senior Notes due 2025 were issued pursuant to the provisions of the indenture dated May 31, 2016, as supplemented by a supplemental indenture dated December 15, 2020, which was filed with the Securities and Exchange Commission as an exhibit to a Form 8-K on December 15, 2020. The indentures contain a complete description of the terms of the Convertible Senior Notes due 2025. The key terms are as follows:
Maturity Date: | December 1, 2025 unless repurchased or converted earlier
Interest Rate: | 6.0% cash interest per year
Interest Payments Dates: | June 1 and December 1 of each year, beginning on December 1, 2021
Initial Conversion Price: | $7.82 per common share of the Company
Initial Conversion Rate: | 127.8119 common shares per $1,000 principal amount of Notes
The principal amount of the Convertible Senior Notes due 2025 as of December 31, 2024 is $5.5 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 are convertible at the option of the 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 conversi on price. This criterion was met during the fourth quarter of 2024 (and each preceding quarter of 2024 and 2023) and as such the notes can be converted at the option of the holders beginning January 1 through March 31, 2025. Whether the notes will be convertible following such period will depend on if this criterion, or another conversion condition, is met in the future. 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. The components of the Convertible Senior Notes due 2025 as of December 31, 2024 and 2023 were as follows:
|  | December 31, |
|  | 2024 |  |  | 2023 |
Principal |  | $ | 5.5 |  |  | $ | 13.3 |
Less: Debt issuance costs, net of amortization |  |  | (0.1 | ) |  |  | (0.1 | )
Convertible Senior Notes due 2025, net |  | $ | 5.4 |  |  | $ | 13.2 |
In the fourth quarter of 2024, the Company repurchased a total of $7.8 million aggregate principal amount of its Convertible Senior Notes due 2025. Total cash paid to noteholders was $17.2 million. A loss on extinguishment of debt of $9.4 million was recognized, including a charge of $0.1 million for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs. 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. In the first half of 2022, the Company repurchased a total of $25.2 million aggregate principal amount of its Convertible Senior Notes Due 2025. There were no repurchases related to the Convertible Notes during the second h alf of 2022. Total cash paid to noteholders was $67.6 million. A loss on extinguishment of debt was recognized of $43.0 million, including a charge of $0.6 million for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs. Fair Value Measurement The fair value of the Convertible Senior Notes due 2025 was approximately $10.2 million as of December 31, 2024 and $41.5 million as of December 31, 2023. 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 December 31, 2024, 2023, and 2022. Interest (income) expense, net The following table provides the components of interest (income) expense, net for the years ended December 31, 2024, 2023 and 2022:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Interest expense |  | $ | 2.5 |  |  | $ | 2.7 |  |  | $ | 3.9 |
Interest income |  |  | (12.1 | ) |  |  | (9.8 | ) |  |  | (3.3 | )
Interest (income) expense, net |  | $ | (9.6 | ) |  | $ | (7.1 | ) |  | $ | 0.6 |
Interest income primarily relates to interest earned on cash invested in a money market fund and deposits with financial institutions. As of December 31, 2024, the carrying value of the Company's money market investment was $110.2 million, which approximates the fair value. The Company had $139.7 million invested in a money market fund as of December 31, 2023, and $209.5 cash invested in a money market fund as of December 31, 2022. 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 December 31, 2024 and 2023, the Company has $125.4 and $119.9 million, respectively, of cash held in other accounts which generate interest income at a rate similar to the money market fund. The following table sets forth total interest expense recognized specifically related to the Convertible Notes:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Contractual interest expense |  | $ | 0.7 |  |  | $ | 0.9 |  |  | $ | 1.7 |
Amortization of debt issuance costs |  |  | 0.1 |  |  |  | 0.1 |  |  |  | 0.1 |
Total |  | $ | 0.8 |  |  | $ | 1.0 |  |  | $ | 1.8 |
The total cash interest paid for the year ended December 31, 2024 , 2023, and 2022 was $ 2.0 million, $2.1 million and $3.1 million, respectively. 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 year ended December 31, 2024, the Company repurchased approximately 2.0 million common shares in the open market at an aggregate cost of $37.6 million, which equates to an average repurchase price of $18.45 per share. As of December 31, 2024, the Company had a balance of $102.8 million remaining under its share repurchase program. For the year ended December 31, 2023, the Company repurchased approximately 1.7 million common shares in the open market at an aggregate cost of $32.6 million, which equates to an average repurchase price of $19.03 per share. For the year ended December 31, 2022, the Company repurchased approximately 3.0 million common shares in the open market at an aggregate cost of $52.0 million, which equates to an average repurchase price of $17.18 per share. Subsequent to December 31, 2024, the Company repurchased 0.2 million additional common shares in the open market at an aggregate cost of $3.3 million, which equates to an average repurchase price of $14.61 per share. As of February 17, 2025, the Company has $99.5 million remaining under its authorized share repurchase program.

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