CANTON, Ohio, May 7, 2020 /PRNewswire/ -- TimkenSteel
(NYSE: TMST), a leader in customized alloy steel products and
services, today reported 2020 first-quarter net sales of
$259.7 million and a net loss of
$19.9 million. In the same quarter
last year, net sales were $371
million with net income of $3.5
million. Excluding certain items, the adjusted net
loss(1) was $11.3 million
in the first quarter of 2020. Adjusted EBITDA(1) for the
first quarter of 2020 was $9 million
compared with EBITDA(1) of $25.6
million in the same quarter last year. First-quarter 2020
financial results represented a significant sequential improvement
from the fourth quarter of 2019, which included net sales of
$226.9 million, a net loss of
$84.6 million and an adjusted EBITDA
loss(1) of $8.7
million.
"Our most important priority is always the health and well-being
of our employees. That has never been more important than during
the ongoing COVID-19 crisis. I am proud that we achieved the safest
quarter in the company's history while implementing significant
COVID-19-related changes in our operations. At the same time, we
remain highly focused on improving the company's financial results,
significantly reducing costs and aggressively managing working
capital. Our customers also are navigating an unprecedented
environment and we're staying very close to them to listen to their
needs and serve them effectively," said Terry L. Dunlap, interim chief executive officer
and president. "During the first quarter, we generated record-high
operating cash flow and achieved our earnings guidance. In the
coming months, we intend to safely maintain flexible production
schedules to meet what is expected to be lower customer demand
while continuing to further reduce costs and prudently conserve
cash to maximize our available liquidity."
FIRST QUARTER OF 2020 FINANCIAL SUMMARY
- Net sales of $259.7
million decreased $111.3
million or approximately 30 percent compared with the
prior-year first quarter. Lower shipment volume, surcharge revenue
and base sales per ton all were contributing factors to the decline
in net sales. In comparison to the fourth quarter of 2019, net
sales increased 14 percent.
- Ship tons of 213,400 declined 18 percent from the
prior-year first quarter as a result of lower demand across all end
markets with the exception of OCTG billets. In comparison to the
fourth quarter of 2019, ship tons increased 19 percent.
- Surcharge revenue decreased $43.8
million or 49 percent from the prior-year period driven by
lower shipment volume coupled with a 38 percent decline in the
average surcharge per ton due to lower market prices for scrap and
alloys.
- Manufacturing cost absorption was negatively impacted by
low plant utilization compared with the prior-year first quarter,
partially offset by aggressive cost control actions.
- SG&A expense of $23.4
million was relatively consistent with the prior-year first
quarter and reflects a non-cash increase in bad debt expense and
variable compensation, substantially offset by lower wages and
benefits as a result of the company's restructuring actions.
(1) Please see discussion of non-GAAP
financial measures in this news release.
COVID-19 UPDATE
TimkenSteel has been designated
as an "essential business" by both the Department of Homeland
Security and Ohio Governor
Mike DeWine and, as such, the
company has continued to operate to serve customers and critical
end markets. To ensure a safe working environment, the company's
cross-functional COVID-19 response team closely follows health and
safety guidelines set forth by the Centers for Disease Control and
Prevention, U.S. Department of Labor and Ohio Department of Health.
Many employees are working remotely and those who cannot are
practicing good hygiene and physical distancing and are adhering to
enhanced safety precautions such as additional cleaning procedures,
health screenings and daily audits of new procedures.
COST REDUCTION ACTIONS
In response to the significant
reduction in customer demand resulting from the COVID-19 crisis,
the company has taken additional actions to further reduce
operating expenses, conserve cash and maximize liquidity, such
as:
- Reduced interim CEO and senior executives' base salaries by 20
percent and other executives' base salaries by 10 percent,
effective May 1;
- Reduced cash retainer for its board of directors by 20 percent
beginning with the second-quarter 2020, and reduced the value of
the board's annual equity grant by 20 percent;
- Suspended company's 401(k) plan matching contributions for
salaried employees, effective June
1;
- Implemented unpaid rolling furloughs for approximately 80
percent of salaried employees, beginning in early April;
- Aggressively reduced production schedules at all plants to
align operations with customer demand, resulting in the temporary
layoff of manufacturing employees;
- Reduced planned 2020 capital expenditures to a maximum of
$25 million, a $5 million reduction from previously stated
guidance; and
- Deferred Social Security payroll tax remittance as permitted by
the CARES Act.
CASH AND LIQUIDITY
Operating cash flow was
$63.8 million for the first quarter
of 2020, benefiting from actions to more effectively manage working
capital coupled with results of cost reduction initiatives begun in
the prior year. Additionally, the company realized $7.8 million of cash proceeds in the quarter from
the sale of assets associated with previously announced business
divestitures. Significant cash generation in the quarter enabled
the company to pay down $30 million
of debt and maintain a higher-than-historical level of cash at
quarter-end of $65.6 million. As of
March 31, 2020, the company had $290
million of available liquidity (available borrowing capacity
plus cash and cash equivalents), its highest level of available
liquidity in more than five years.
OUTLOOK
As noted, the company will continue to focus
on employee safety, serving customers, conserving cash and aligning
costs and production with sharply lower COVID-19-driven demand. The
company remains committed to delivering approximately $70 million of run rate savings from its previous
cost reduction actions. Additionally, the company executed recent
actions as noted above and will continue to evaluate other actions
to further improve its cost structure and position the company well
when its markets recover.
The extent and duration of the COVID-19 pandemic and resulting
effect on the company's operations and financial results remain
uncertain. Given the evolving impact of COVID-19 on the overall
economy, the company will not provide quarterly guidance at this
time.
TIMKENSTEEL EARNINGS CALL
INFORMATION
The company will
host a conference call at 9 a.m. ET on
Friday, May 8, to discuss its financial performance with
investors and securities analysts. The financial results will be
available online at investors.timkensteel.com.
Conference
call
|
Friday, May 8,
2020
9a.m. ET Toll-free dial-in:
833-238-7951 International
dial-in: 647-689-4199
Conference ID: 6597933
|
Conference call
replay
|
Replay dial-in
available through May 15, 2020 800-585-8367 or 416-621-4642 Replay passcode: 6597933
|
About TimkenSteel Corporation
TimkenSteel (NYSE:
TMST) manufactures high-performance carbon and alloy steel products
in Canton, OH serving demanding
applications in automotive, energy and a variety of industrial end
markets. The company is a premier U.S. producer of alloy steel bars
(up to 16 inches in diameter), seamless mechanical tubing and
precision components. In the business of making
high-quality steel primarily from recycled materials
for more than 100 years, TimkenSteel's proven expertise contributes
to the performance of our customers' products. The
company employs approximately 2,200 people and had sales of
$1.2 billion in 2019. For more
information, please visit us at www.timkensteel.com.
NON-GAAP FINANCIAL MEASURES
TimkenSteel reports its
financial results in accordance with accounting principles
generally accepted in the United
States ("GAAP") and corresponding metrics as non-GAAP
financial measures. This earnings release includes references to
the following non-GAAP financial measures: adjusted earnings (loss)
per share, adjusted net income (loss), EBIT, adjusted EBIT, EBITDA,
adjusted EBITDA, and free cash flow. These are important financial
measures used in the management of the business, including
decisions concerning the allocation of resources and assessment of
performance. Management believes that reporting these non-GAAP
financial measures is useful to investors as these measures are
representative of the company's performance and provide improved
comparability of results. See the attached schedules for
definitions of the non-GAAP financial measures referred to above
and corresponding reconciliations of these non-GAAP financial
measures to the most comparable GAAP financial measures. Non-GAAP
financial measures should be viewed as additions to, and not as
alternatives for, TimkenSteel's results prepared in accordance with
GAAP. In addition, the non-GAAP measures TimkenSteel uses may
differ from non-GAAP measures used by other companies, and other
companies may not define the non-GAAP measures TimkenSteel uses in
the same way.
FORWARD-LOOKING STATEMENTS
This news release
includes "forward-looking" statements within the meaning of the
federal securities laws. You can generally identify the company's
forward-looking statements by words such as "will," "anticipate,"
"believe," "could," "estimate," "expect," "forecast," "outlook,"
"intend," "may," "possible," "potential," "predict," "project,"
"seek," "target," "could," "may," "should" or "would" or other
similar words, phrases or expressions that convey the uncertainty
of future events or outcomes. The company cautions readers that
actual results may differ materially from those expressed or
implied in forward-looking statements made by or on behalf of the
company due to a variety of factors, such as: the potential
impact of the COVID-19 pandemic on the company's operations,
financial results, and liquidity; whether the company is
able to successfully implement actions designed to improve
profitability on anticipated terms and timetables and whether the
company is able to fully realize the expected benefits of such
actions; deterioration in world economic conditions, or in economic
conditions in any of the geographic regions in which the company
conducts business, including additional adverse effects from global
economic slowdown, terrorism or hostilities, including political
risks associated with the potential instability of governments and
legal systems in countries in which the company or its customers
conduct business, and changes in currency valuations; the effects
of fluctuations in customer demand on sales, product mix and prices
in the industries in which the company operates, including the
ability of the company to respond to rapid changes in customer
demand, the effects of customer bankruptcies or liquidations, the
impact of changes in industrial business cycles, and whether
conditions of fair trade exist in U.S. markets; competitive
factors, including changes in market penetration, increasing price
competition by existing or new foreign and domestic competitors,
the introduction of new products by existing and new competitors,
and new technology that may impact the way the company's products
are sold or distributed; changes in operating costs, including the
effect of changes in the company's manufacturing processes, changes
in costs associated with varying levels of operations and
manufacturing capacity, availability of raw materials and energy,
the company's ability to mitigate the impact of fluctuations in raw
materials and energy costs and the effectiveness of its surcharge
mechanism, changes in the expected costs associated with product
warranty claims, changes resulting from inventory management, cost
reduction initiatives and different levels of customer demands, the
effects of unplanned work stoppages, and changes in the cost of
labor and benefits; the success of the company's operating plans,
announced programs, initiatives and capital investments (including
the jumbo bloom vertical caster and advanced quench-and-temper
facility), the ability to integrate acquired companies, the ability
of acquired companies to achieve satisfactory operating results,
including results being accretive to earnings, and the company's
ability to maintain appropriate relations with unions that
represent its associates in certain locations in order to avoid
disruptions of business; unanticipated litigation, claims or
assessments, including claims or problems related to intellectual
property, product liability or warranty, and environmental issues
and taxes, among other matters; the availability of financing and
interest rates, which affect the company's cost of funds and/or
ability to raise capital, the company's pension obligations and
investment performance, and/or customer demand and the ability of
customers to obtain financing to purchase the company's products or
equipment that contain its products; the amount of any dividend
declared by the company's Board of Directors on the company's
common shares; and the overall impact of mark-to-market accounting.
Additional risks relating to the company's business, the industries
in which the company operates, or the company's common shares may
be described from time to time in the company's filings with the
SEC. All of these risk factors are difficult to predict, are
subject to material uncertainties that may affect actual results
and may be beyond the company's control. Readers are
cautioned that it is not possible to predict or identify all of the
risks, uncertainties and other factors that may affect future
results and that the above list should not be considered to be a
complete list. Except as required by the federal securities laws,
the company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events or otherwise.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
March
31,
|
(in millions,
except per share data) (Unaudited)
|
|
2020
|
|
2019
|
Net sales
|
|
$
|
259.7
|
|
$
|
371.0
|
Cost of products
sold
|
|
|
251.9
|
|
|
342.6
|
Gross
Profit
|
|
|
7.8
|
|
|
28.4
|
Selling, general
& administrative expenses (SG&A)
|
|
|
23.4
|
|
|
23.3
|
Restructuring
charges
|
|
|
0.6
|
|
|
—
|
Impairment charges
and loss (gain) on sale or disposal of assets
|
|
|
(2.3)
|
|
|
—
|
Other expense
(income), net
|
|
|
2.7
|
|
|
(2.7)
|
Earnings (Loss)
Before Interest and Taxes (EBIT) (1)
|
|
|
(16.6)
|
|
|
7.8
|
Interest
expense
|
|
|
3.2
|
|
|
4.2
|
Income (Loss)
Before Income Taxes
|
|
|
(19.8)
|
|
|
3.6
|
Provision (benefit)
for income taxes
|
|
|
0.1
|
|
|
0.1
|
Net Income
(Loss)
|
|
$
|
(19.9)
|
|
$
|
3.5
|
|
|
|
|
|
|
|
Net Income (Loss)
per Common Share:
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
|
$
|
(0.44)
|
|
$
|
0.08
|
Diluted earnings
(loss) per share (2)
|
|
$
|
(0.44)
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - basic
|
|
|
44.9
|
|
|
44.7
|
Weighted average
shares outstanding - diluted
|
|
|
44.9
|
|
|
45.2
|
|
(1) EBIT is defined as net income
(loss) before interest expense and income taxes. EBIT is an
important financial measure used in the management of the business,
including decisions concerning the allocation of resources and
assessment of performance. Management believes that reporting EBIT
is useful to investors as this measure is representative of the
Company's performance.
|
|
(2) Common share equivalents for
shares issuable for equity-based awards and common share
equivalents for shares issuable upon the conversion of outstanding
convertible notes, were excluded from the computation of diluted
earnings (loss) per share for the three months ended March 31, 2020
because the effect of their inclusion would have been
anti-dilutive.
|
CONSOLIDATED
BALANCE SHEETS
|
(Dollars in
millions) (Unaudited)
|
|
March 31,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
65.6
|
|
$
|
27.1
|
Accounts receivable,
net of allowances
|
|
|
94.9
|
|
|
77.5
|
Inventories,
net
|
|
|
240.5
|
|
|
281.9
|
Deferred charges and
prepaid expenses
|
|
|
3.6
|
|
|
3.3
|
Assets held for
sale
|
|
|
2.2
|
|
|
4.1
|
Other current
assets
|
|
|
5.3
|
|
|
7.8
|
Total Current
Assets
|
|
|
412.1
|
|
|
401.7
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
608.7
|
|
|
626.4
|
Operating lease
right-of-use assets
|
|
|
16.3
|
|
|
14.3
|
Pension
assets
|
|
|
17.2
|
|
|
25.2
|
Intangible assets,
net
|
|
|
12.4
|
|
|
14.3
|
Other non-current
assets
|
|
|
3.3
|
|
|
3.3
|
Total
Assets
|
|
$
|
1,070.0
|
|
$
|
1,085.2
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
96.0
|
|
$
|
69.3
|
Salaries, wages and
benefits
|
|
|
21.3
|
|
|
13.9
|
Accrued pension and
postretirement costs
|
|
|
3.0
|
|
|
3.0
|
Current operating
lease liabilities
|
|
|
6.6
|
|
|
6.2
|
Other current
liabilities
|
|
|
16.5
|
|
|
19.9
|
Total Current
Liabilities
|
|
|
143.4
|
|
|
112.3
|
|
|
|
|
|
|
|
Convertible notes,
net
|
|
|
79.8
|
|
|
78.6
|
Credit
agreement
|
|
|
60.0
|
|
|
90.0
|
Non-current operating
lease liabilities
|
|
|
9.7
|
|
|
8.2
|
Accrued pension and
postretirement costs
|
|
|
222.3
|
|
|
222.1
|
Deferred income
taxes
|
|
|
0.9
|
|
|
0.9
|
Other non-current
liabilities
|
|
|
11.8
|
|
|
10.0
|
Total
Liabilities
|
|
|
527.9
|
|
|
522.1
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Additional paid-in
capital
|
|
|
841.1
|
|
|
844.8
|
Retained
deficit
|
|
|
(321.4)
|
|
|
(301.5)
|
Treasury
shares
|
|
|
(19.4)
|
|
|
(24.9)
|
Accumulated other
comprehensive income (loss)
|
|
|
41.8
|
|
|
44.7
|
Total Shareholders'
Equity
|
|
|
542.1
|
|
|
563.1
|
Total Liabilities and
Shareholders' Equity
|
|
$
|
1,070.0
|
|
$
|
1,085.2
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Dollars in
millions) (Unaudited)
|
|
Three Months
Ended
March
31,
|
|
|
2020
|
|
2019
|
CASH PROVIDED
(USED)
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(19.9)
|
|
$
|
3.5
|
Adjustments to
reconcile net income (loss) to net cash provided (used) by
operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
18.6
|
|
|
17.8
|
Amortization of
deferred financing fees and debt discount
|
|
|
1.3
|
|
|
1.3
|
Loss (gain) on sale
or disposal of assets
|
|
|
(2.3)
|
|
|
—
|
Deferred income
taxes
|
|
|
0.2
|
|
|
(0.2)
|
Stock-based
compensation expense
|
|
|
2.0
|
|
|
2.2
|
Pension and
postretirement expense (benefit), net
|
|
|
8.1
|
|
|
1.8
|
Pension and
postretirement contributions and payments
|
|
|
(2.5)
|
|
|
(2.4)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
|
(16.3)
|
|
|
12.1
|
Inventories,
net
|
|
|
41.2
|
|
|
(26.8)
|
Accounts
payable
|
|
|
26.7
|
|
|
(30.7)
|
Other accrued
expenses
|
|
|
5.7
|
|
|
(11.4)
|
Deferred charges and
prepaid expenses
|
|
|
(0.3)
|
|
|
0.1
|
Other, net
|
|
|
1.3
|
|
|
(0.9)
|
Net Cash Provided
(Used) by Operating Activities
|
|
|
63.8
|
|
|
(33.6)
|
Investing
Activities
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(2.9)
|
|
|
(4.4)
|
Proceeds from
disposals of property, plant and equipment
|
|
|
7.8
|
|
|
—
|
Net Cash Provided
(Used) by Investing Activities
|
|
|
4.9
|
|
|
(4.4)
|
Financing
Activities
|
|
|
|
|
|
|
Proceeds from
exercise of stock options
|
|
|
—
|
|
|
0.2
|
Shares surrendered
for employee taxes on stock compensation
|
|
|
(0.2)
|
|
|
(1.0)
|
Repayments on credit
agreements
|
|
|
(30.0)
|
|
|
(5.0)
|
Borrowings on credit
agreements
|
|
|
—
|
|
|
30.0
|
Net Cash Provided
(Used) by Financing Activities
|
|
|
(30.2)
|
|
|
24.2
|
Increase (Decrease)
in Cash and Cash Equivalents
|
|
|
38.5
|
|
|
(13.8)
|
Cash and cash
equivalents at beginning of period
|
|
|
27.1
|
|
|
21.6
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
65.6
|
|
$
|
7.8
|
Reconciliation of
Free Cash Flow(1) to GAAP Net Cash Provided (Used)
by Operating Activities:
|
|
This reconciliation
is provided as additional relevant information about the Company's
financial position. Free cash flow is an important financial
measure used in the management of the business. Management believes
that free cash flow is useful to investors because it is a
meaningful indicator of cash generated from operating activities
available for the execution of its business strategy.
|
|
|
|
Three Months
Ended
March
31,
|
(Dollars in
millions) (Unaudited)
|
|
2020
|
|
2019
|
Net Cash Provided
(Used) by Operating Activities
|
|
$
|
63.8
|
|
$
|
(33.6)
|
Less: Capital
expenditures
|
|
|
(2.9)
|
|
|
(4.4)
|
Free Cash
Flow
|
|
$
|
60.9
|
|
$
|
(38.0)
|
|
(1) Free Cash Flow is defined as net
cash provided (used) by operating activities less capital
expenditures.
|
Reconciliation of
adjusted net income (loss)(2) to GAAP net income
(loss) and adjusted diluted earnings (loss) per
share(1) to GAAP diluted earnings (loss) per share
for the three months ended March 31, 2020
|
|
Adjusted net income
(loss), adjusted diluted earnings (loss) per share and other
adjusted items referred to below are financial measures not
required by, or presented in accordance with GAAP. These Non-GAAP
financial measures should be considered as a supplement to, and not
as a substitute for, the financial measures prepared in accordance
with GAAP, and a reconciliation of these financial measures to the
most comparable GAAP financial measures is presented. We believe
this data provides investors with additional useful information on
the underlying operations and trends of the business and enables
period-to-period comparability of our financial
performance.
|
|
Three months ended
March 31, 2020
|
(Dollars in
millions) (Unaudited)
|
|
Net
income
(loss)
|
|
Cost
of
products
sold
|
|
Restructuring
charges
|
|
Loss
(gain) on
sale or
disposal
of
assets
|
|
Other
expense
(income),
Net
|
|
Diluted
earnings
(loss)
per
share(1)
|
As
reported
|
|
$
|
(19.9)
|
|
$
|
251.9
|
|
$
|
0.6
|
|
$
|
(2.3)
|
|
$
|
2.7
|
|
$
|
(0.44)
|
Adjustments:(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of
scrap processing facility
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.00
|
Gain on sale of
TMS assets
|
|
|
(3.2)
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
|
—
|
|
|
(0.07)
|
Restructuring
charges
|
|
|
0.6
|
|
|
—
|
|
|
(0.6)
|
|
|
—
|
|
|
—
|
|
|
0.01
|
Accelerated
depreciation and amortization
|
|
|
1.6
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.04
|
Loss from
remeasurement of benefit plans
|
|
|
9.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9.5)
|
|
|
0.21
|
Faircrest plant
asset disposal, net of recovery
|
|
|
(0.1)
|
|
|
—
|
|
|
—
|
|
|
(0.2)
|
|
|
0.3
|
|
|
(0.00)
|
As
adjusted
|
|
$
|
(11.3)
|
|
$
|
253.5
|
|
$
|
—
|
|
$
|
0.9
|
|
$
|
(6.5)
|
|
$
|
(0.25)
|
|
(1) Common share equivalents for
shares issuable upon the conversion of outstanding convertible
notes and Common share equivalents for shares issuable for
equity-based awards for the three months ended March 31, 2020, were
excluded from the computation of adjusted diluted earnings (loss)
per share because the effect of their inclusion would have been
anti-dilutive.
|
|
(2) Adjusted net income (loss) is
defined as net income (loss) excluding for the three months ended
March 31, 2020, the loss from remeasurement of benefit plans,
restructuring charges, gain and loss on sale or disposal of assets
and accelerated depreciation and amortization.
|
Reconciliation of
Earnings (Loss) Before Interest and Taxes (EBIT)(1),
Adjusted EBIT(3), Earnings (Loss) Before Interest,
Taxes, Depreciation and Amortization
(EBITDA)(2) and Adjusted
EBITDA(4) to GAAP Net Income (Loss):
|
|
This reconciliation
is provided as additional relevant information about the company's
performance. EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA are
important financial measures used in the management of the
business, including decisions concerning the allocation of
resources and assessment of performance. Management believes that
reporting EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA is useful
to investors as these measures are representative of the company's
performance. Management also believes that it is appropriate to
compare GAAP net income (loss) to EBIT, Adjusted EBIT, EBITDA and
Adjusted EBITDA.
|
|
|
|
Three Months Ended
March
31,
|
|
Three Months Ended
December
31,
|
(Dollars in
millions) (Unaudited)
|
|
2020
|
|
2019
|
|
2019
|
Net income
(loss)
|
|
$
|
(19.9)
|
|
$
|
3.5
|
|
$
|
(84.6)
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
|
|
0.1
|
|
|
0.1
|
|
|
(7.8)
|
Interest
expense
|
|
|
3.2
|
|
|
4.2
|
|
|
3.7
|
Earnings Before
Interest and Taxes (EBIT) (1)
|
|
$
|
(16.6)
|
|
$
|
7.8
|
|
$
|
(88.7)
|
EBIT Margin
(1)
|
|
|
(6.4)%
|
|
|
2.1%
|
|
|
(39.1)%
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
18.6
|
|
|
17.8
|
|
|
20.3%
|
Earnings Before
Interest, Taxes, Depreciation and
Amortization (EBITDA) (2)
|
|
$
|
2.0
|
|
$
|
25.6
|
|
$
|
(68.4)
|
EBITDA Margin
(2)
|
|
|
0.8%
|
|
|
6.9%
|
|
|
(30.1)%
|
Executive severance
and transition costs
|
|
|
—
|
|
|
—
|
|
|
(5.6)
|
Impairment
charges
|
|
|
—
|
|
|
—
|
|
|
(7.3)
|
Restructuring
charges
|
|
|
(0.6)
|
|
|
—
|
|
|
(5.3)
|
Loss from
remeasurement of benefit plans
|
|
|
(9.5)
|
|
|
—
|
|
|
(36.2)
|
Facility phase down:
Inventory write-down
|
|
|
—
|
|
|
—
|
|
|
(4.8)
|
Accelerated
depreciation and amortization (EBIT only)
|
|
|
(1.6)
|
|
|
—
|
|
|
(2.8)
|
Business
transformation costs
|
|
|
—
|
|
|
—
|
|
|
(0.5)
|
Gain on sale of TMS
assets
|
|
|
3.2
|
|
|
—
|
|
|
—
|
Loss on sale of scrap
processing facility
|
|
|
(0.2)
|
|
|
—
|
|
|
—
|
Faircrest plant asset
disposal, net of recovery
|
|
|
0.1
|
|
|
—
|
|
|
—
|
Adjusted EBIT
(3)
|
|
$
|
(8.0)
|
|
$
|
7.8
|
|
$
|
(26.2)
|
Adjusted EBIT Margin
(3)
|
|
|
(3.1)%
|
|
|
2.1%
|
|
|
(11.5)%
|
Adjusted EBITDA
(4)
|
|
$
|
9.0
|
|
$
|
25.6
|
|
$
|
(8.7)
|
Adjusted EBITDA
Margin (4)
|
|
|
(3.8)%
|
|
|
9.1%
|
|
|
(3.8)%
|
|
(1) EBIT is defined as net income
(loss) before interest expense and income taxes. EBIT Margin is
EBIT as a percentage of net sales.
|
|
(2) EBITDA is defined as net income
(loss) before interest expense, income taxes, depreciation and
amortization. EBITDA Margin is EBITDA as a percentage of net
sales.
|
|
(3) Adjusted EBIT is defined as EBIT
excluding, as applicable, executive severance and transition costs,
impairment charges, restructuring charges, the loss from
remeasurement of benefit plans, facility phase down: inventory
write-down, accelerated depreciation and amortization, business
transformation costs, the gain on sale of TMS assets, loss on
disposal of our scrap processing facility, and the disposal of
certain Faircrest plant assets, net of recovery. Adjusted EBIT
Margin is Adjusted EBIT as a percentage of net sales.
|
|
(4) Adjusted EBITDA is defined as
EBITDA excluding, as applicable, executive severance and transition
costs, impairment charges, restructuring charges, the loss from
remeasurement of benefit plans, facility phase down: inventory
write-down, business transformation costs, the gain on sale of TMS
assets, loss on disposal of our scrap processing facility, and the
disposal of certain Faircrest plant assets, net of recovery.
Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of net
sales.
|
Reconciliation of
Total Liquidity(1) to GAAP Cash and Cash
Equivalents and Credit Facility Amount Borrowed:
|
|
This reconciliation
is provided as additional relevant information about the Company's
financial position. Total liquidity is an important financial
measure used in the management of the business. Management believes
that total liquidity is useful to investors because it is a
meaningful indicator of overall ability to operate and execute its
business strategy.
|
|
(Dollars in
millions) (Unaudited)
|
|
March
31,
2020
|
|
December
31,
2019
|
Cash and cash
equivalents
|
|
$
|
65.6
|
|
$
|
27.1
|
|
|
|
|
|
|
|
Credit
Agreement:
|
|
|
|
|
|
|
Maximum
availability
|
|
$
|
400.0
|
|
$
|
400.0
|
Suppressed
availability(2)
|
|
|
(111.9)
|
|
|
(103.0)
|
Availability
|
|
|
288.1
|
|
|
297.0
|
Credit facility
amount borrowed
|
|
|
(60.0)
|
|
|
(90.0)
|
Letter of credit
obligations
|
|
|
(3.7)
|
|
|
(3.8)
|
Availability not
borrowed
|
|
|
224.4
|
|
|
203.2
|
|
|
|
|
|
|
|
Total
liquidity
|
|
$
|
290.0
|
|
$
|
230.3
|
|
(1) Total Liquidity is defined as
available borrowing capacity plus cash and cash
equivalents.
|
|
(2) As of March 31, 2020 and December
31, 2019, TimkenSteel had less than $400 million in collateral
assets to borrow against.
|
ADJUSTED
EBITDA(1) WALKS
|
(Dollars in
millions) (Unaudited)
|
|
2019
1Q
vs. 2020
1Q
|
|
2019
4Q
vs. 2020
1Q
|
Beginning Adjusted
EBITDA(1)
|
|
$
|
26
|
|
$
|
(9)
|
Volume
|
|
|
(10)
|
|
|
6
|
Price/Mix
|
|
|
(7)
|
|
|
(4)
|
Raw Material
Spread
|
|
|
(1)
|
|
|
11
|
Manufacturing
|
|
|
(1)
|
|
|
8
|
SG&A
|
|
|
—
|
|
|
(3)
|
Other
|
|
|
2
|
|
|
—
|
Ending Adjusted
EBITDA(1)
|
|
$
|
9
|
|
$
|
9
|
|
(1) Please refer to the
Reconciliation of Earnings (Loss) Before Interest and Taxes (EBIT),
Adjusted EBIT, Earnings (Loss) Before Interest, Taxes, Depreciation
and Amortization (EBITDA) and Adjusted EBITDA to GAAP Net Income
(Loss).
|
The tables below present net sales by end-market sector,
adjusted to exclude raw material surcharges, which represents a
financial measure that has not been determined in accordance with
U.S. GAAP. We believe presenting net sales by end-market sector,
adjusted to exclude raw material surcharges, provides additional
insight into key drivers of net sales such as base price and
product mix.
Quarterly End
Market Sector Sales Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
millions, tons in thousands)
|
|
|
|
Three Months Ended
March 31, 2020
|
|
|
Mobile
|
|
Industrial
|
|
Energy
|
|
Other
|
|
Total
|
Tons
|
|
|
88.8
|
|
|
81.2
|
|
|
18.4
|
|
|
25.0
|
|
|
213.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
97.7
|
|
$
|
113.3
|
|
$
|
25.2
|
|
$
|
23.5
|
|
$
|
259.7
|
Less:
Surcharges
|
|
|
16.6
|
|
|
18.8
|
|
|
4.2
|
|
|
6.3
|
|
|
45.9
|
Base Sales
|
|
$
|
81.1
|
|
$
|
94.5
|
|
$
|
21.0
|
|
$
|
17.2
|
|
$
|
213.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales /
Ton
|
|
$
|
1,100
|
|
$
|
1,395
|
|
$
|
1,370
|
|
$
|
940
|
|
$
|
1,217
|
Base Sales /
Ton
|
|
$
|
913
|
|
$
|
1,164
|
|
$
|
1,141
|
|
$
|
688
|
|
$
|
1,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2019
|
|
|
Mobile
|
|
Industrial
|
|
Energy
|
|
Other
|
|
Total
|
Tons
|
|
|
112.8
|
|
|
102.5
|
|
|
31.4
|
|
|
14.2
|
|
|
260.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
144.2
|
|
$
|
147.0
|
|
$
|
60.8
|
|
$
|
19.0
|
|
$
|
371.0
|
Less:
Surcharges
|
|
|
37.5
|
|
|
35.1
|
|
|
12.5
|
|
|
4.6
|
|
|
89.7
|
Base Sales
|
|
$
|
106.7
|
|
$
|
111.9
|
|
$
|
48.3
|
|
$
|
14.4
|
|
$
|
281.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales /
Ton
|
|
$
|
1,278
|
|
$
|
1,434
|
|
$
|
1,936
|
|
$
|
1,338
|
|
$
|
1,422
|
Base Sales /
Ton
|
|
$
|
946
|
|
$
|
1,092
|
|
$
|
1,538
|
|
$
|
1,014
|
|
$
|
1,078
|
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SOURCE TimkenSteel Corp.