Detailed narrative
Operational Improvements and Strategic Investments
The bloom reheat furnace was fully commissioned in early July, enhancing process consistency, downstream product flow, and reliability across facilities. Commissioning of the roller furnace remains on track and is progressing as planned. These U.S. government-funded investments are expected to improve throughput, quality, efficiency, and service levels, strengthening manufacturing capabilities for critical aerospace and defense programs and meeting increasing customer demand across industrial, automotive, and energy markets.
End Market Performance
Automotive shipments grew 12% sequentially and 8% year-over-year, driven by steady demand in targeted light truck and SUV applications. The company secured a new multi-year award for ring gears on a leading automaker's hybrid transmission platform, with production expected to begin in 2028.
Industrial markets remain strong, with the industrial backlog nearly doubling year-over-year, primarily driven by the yellow goods market. Energy demand remained stable despite cautious capital spending, supported by reduced import competition and improving domestic production.
Aerospace & Defense Momentum
The Aerospace and Defense segment delivered record shipment tons and sales in Q2, supported by new defense initiatives and existing program replenishment efforts. This momentum supports confidence in achieving a targeted $250 million revenue run rate by the end of 2026.
The company also achieved AS9100D certification during the quarter, a widely recognized quality standard, which strengthens its competitive position and expands opportunities in high-value markets.
Financial Performance and Capital Allocation
Adjusted EBITDA increased 9% year-over-year to $29 million, with net sales up 12% to $341 million. The company received the final $11.3 million of a nearly $100 million U.S. Army funding agreement in Q2. Share repurchases totaled $3.6 million for approximately 190,000 shares in Q2, with $81.8 million remaining under authorization.
These actions have contributed to a significant 26% reduction in diluted shares outstanding since early 2022.
Liquidity and Pricing Outlook
Total liquidity remains strong at $395 million as of June 30, 2026, following the refinancing of its asset-based revolving credit facility to $300 million committed capacity, extending maturity to June 2031. The company announced price increases effective early August for non-contracted customers, including $60 per ton on bar, $100 per ton on carbon seamless mechanical tubing, and $160 per ton on alloy seamless mechanical tubing products.
Full run-rate benefit from these increases is expected in 2027, and lead times for bar and tube products are extended into late Q4 2026.