CANTON, Ohio - Metallus Inc. (NYSE: MTUS), a specialist in metals and manufacturing components, has finalized an agreement to transfer approximately $121 million of its U.S. pension obligations through the purchase of a group annuity contract from The Prudential Insurance Company of America.
This move, announced on May 15, 2024, relates to the termination of the TimkenSteel Corporation Retirement Plan, affecting around 1,000 plan participants.
Starting August 1, 2024, Prudential will assume responsibility for paying future benefits under the group annuity contract. The contract will be funded by the existing assets of the Salaried Pension Plan without requiring additional cash contributions from Metallus Inc.
The termination of the pension plan is part of Metallus' strategy to strengthen its balance sheet by reducing its pension obligations by 20 percent, which is anticipated to result in a non-cash pension settlement gain of about $3 million in the second quarter.
Kris Westbrooks, Metallus' Executive Vice President and CFO, stated, "Following the Bargaining Pension Plan partial annuitization in 2022, the termination of the Salaried Pension Plan is another significant step towards strengthening our balance sheet and de-risking our legacy pension plans." Westbrooks assured that the benefits payable to plan participants would not be reduced due to this transaction.
The decision to select Prudential was made after an objective and thorough analysis by the Salaried Pension Plan's fiduciaries, with the assistance of an independent expert, to ensure Prudential's compliance with regulatory guidelines and its capacity to fulfill the contract obligations.
Metallus Inc. is known for manufacturing high-performance specialty metals and components, with a workforce of approximately 1,860 and sales of $1.4 billion in 2023. Prudential Financial, Inc. (NYSE: NYSE:PRU) is a global financial services leader with $1.5 trillion in assets under management as of March 31, 2024.
This transaction is in line with industry practices where companies seek to mitigate pension-related financial risks by transferring obligations to insurance companies. The information in this article is based on a press release statement from Metallus Inc.
InvestingPro Insights
As Metallus Inc. (NYSE: MTUS) takes strategic steps to strengthen its financial standing by transferring pension obligations, investors may find comfort in the company's current fiscal health. With a market capitalization of approximately $1.04 billion and a price-to-earnings (P/E) ratio of 13.31, Metallus is positioned as a company with a solid valuation in the market.
This is further substantiated by its revenue growth over the last twelve months, which stands at a steady 4.54%. These metrics not only reflect the company's current financial status but also offer insights into its market perception and growth trajectory.
Adding to the company's financial robustness are two noteworthy InvestingPro Tips. Metallus boasts a perfect Piotroski Score of 9, indicating high financial health in several areas including profitability, leverage, liquidity, and operating efficiency.
Moreover, the company's management has been aggressively buying back shares, a move that often signals confidence in the company's future prospects and a commitment to shareholder value. These actions, combined with the recent pension plan termination, suggest a proactive approach to financial management.
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