CANTON, Ohio, Feb. 20, 2020 /PRNewswire/ -- TimkenSteel
(NYSE: TMST), a leader in customized alloy steel products and
services, today reported 2019 fourth-quarter net sales of
$227 million and a net loss of
$85 million. In the same quarter last
year, net sales were $406 million
with net loss of $29 million.
Excluding certain items, the adjusted net loss(1) was
$27 million in the fourth quarter of
2019 compared with adjusted net income(1) of
$14 million in the fourth quarter of
2018. Adjusted EBITDA(1) for the fourth quarter of 2019
was a loss of $8.7 million.
For the full-year 2019, net sales were $1.2 billion with a net loss of $110
million. In comparison, full-year 2018 net sales were $1.6 billion with a net loss of $10 million. Excluding certain items, the
adjusted net loss(1) was $47
million for full-year 2019 and adjusted net
income(1) was $35 million
for full-year 2018. Adjusted EBITDA(1) for
full-year 2019 was $32 million.
"We continue to take significant steps to improve the company's
cost structure and manage working capital efficiency while we
simplify the organization, focus on serving our customers and
improve safety across the company. We've recently reduced our
salaried workforce by 14 percent; divested non-core assets; frozen
certain long-term salaried benefit plans and executed a host of
other actions across the company to position us for success in the
future," said Terry L. Dunlap,
interim chief executive officer and president.
Operating cash flow was $46
million and $70 million for
the fourth quarter and full-year 2019, respectively. As a result of
deliberate inventory reductions across the organization, coupled
with careful management of other working capital elements,
the company generated free cash flow(1) of $30 million in the fourth quarter of 2019. These
working capital improvements enabled the company to pay down
$20 million of debt in the fourth
quarter. As of December 31, 2019, the
company had $230 million of available
liquidity, its highest level of availability in over two years.
(1) Please see discussion of non-GAAP
financial measures in this news release.
FOURTH QUARTER OF 2019 FINANCIAL SUMMARY
- Net sales of $227 million
decreased $180 million or 44 percent
compared with the prior-year quarter. Lower volumes and surcharge
revenue were the primary drivers of this decline.
- Ship tons were 179,700, a decrease of 39 percent from the
prior-year period with all end markets experiencing a double-digit
percentage decline in volume during the quarter.
- Surcharge revenue decreased $69
million from the prior-year period primarily due to a
declining No. 1 Busheling scrap index and lower volume.
- These decreases were slightly offset by favorable base price,
product mix and lower SG&A expense.
- As anticipated, manufacturing expense was negatively impacted
by low plant utilization partially offset by cost reduction
actions.
FULL-YEAR 2019 NET SALES AND VOLUME
- Net sales of $1.2 billion
decreased $402 million or 25 percent
compared with the prior year. Improved price and mix were more than
offset by lower volumes and surcharge revenue in a difficult SBQ
market.
- Ship tons were 898,300, a decrease of 25 percent from the prior
year, primarily driven by lower demand in the energy and industrial
markets as well as lower shipments of OCTG billets.
INVENTORY VALUATION ACCOUNTING CHANGE
In the fourth quarter of 2019, the company changed its inventory
valuation method for the majority of its inventory from the last
in, first out (LIFO) method to the first in, first out (FIFO)
method. The company has retrospectively applied this change to its
prior year financial statements and denoted impacted prior year
columns in the financial statements as "Adjusted."
PROFITABILITY IMPROVEMENT PLAN UPDATE
Aggressive profitability improvement actions resulted in
realized savings of approximately $40
million in 2019, with expected annualized savings of
$70 million going forward. These
actions helped partially offset weak end market demand in 2019 and
are expected to benefit the company in the years to come. The
incremental 2020 savings include the following recent actions:
- Reduced salaried workforce by 14 percent in 2019, including
reductions taken in the fourth quarter. Total annualized savings as
a result of these actions are approximately $18 million. The related restructuring charges
were $5 million and $9 million in the fourth quarter and full-year
2019, respectively.
- Froze the benefit accruals on all remaining salaried pension
and other postretirement benefit plans. These actions will result
in annual savings of approximately $2
million including a reduction in benefit obligation of
approximately $10 million as of
December 31, 2019.
- Completed the previously announced closure of TimkenSteel
Material Services facility in Houston,
Texas, in the first quarter of 2020. Annualized savings of
approximately $8 million are expected
to be realized going forward, and the associated assets will be
liquidated to generate cash. In the fourth quarter of 2019, the
company recorded a total charge of approximately $8 million associated with the closure, the
majority of which was non-cash.
- Divested its scrap processing facility in Akron, Ohio in the first quarter of 2020 for
cash consideration of approximately $4
million following a non-cash write-down of $7 million in the fourth quarter of 2019.
Proceeds from the sale were utilized to pay down debt.
OUTLOOK
- The company expects first-quarter 2020 shipments to increase
from the fourth quarter of 2019 by approximately 15 percent.
- Net loss is projected to be between $12
million and $22 million in the
first quarter of 2020.
- EBITDA(1) is projected to be between break-even to
positive $10 million in the first
quarter of 2020.
- Capital spending is projected to be approximately $30 million in 2020.
TIMKENSTEEL EARNINGS CALL INFORMATION
The company will host a conference call at 9 a.m. ET on
Friday, February 21, to discuss its
financial performance with investors and securities analysts. The
financial results will be available online at
investors.timkensteel.com.
Conference
call
|
Friday, February 21,
2020 9 a.m.
ET Toll-free dial-in:
833-238-7951 International
dial-in: 647-689-4199 Conference ID: 8199656
|
Conference call
replay
|
Replay dial-in
available through February 28, 2020 800-585-8367 or 416-621-4642 Replay passcode: 8199656
|
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 2,500 people and had sales of
$1.2 billion in 2019. For more
information, please visit us at www.timkensteel.com.
(1) Please see discussion of non-GAAP
financial measures in this news release.
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, free cash flow and total liquidity. 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: 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.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
(Dollars in
millions, except per share data) (Unaudited)
|
2019
|
|
2018
Adjusted
|
|
2019
|
|
2018 Adjusted
|
Net sales
|
$
|
226.9
|
|
|
$
|
406.4
|
|
|
$
|
1,208.8
|
|
|
$
|
1,610.6
|
|
Cost of products
sold
|
244.9
|
|
|
369.1
|
|
|
1,186.2
|
|
|
1,484.0
|
|
Gross
Profit
|
(18.0)
|
|
|
37.3
|
|
|
22.6
|
|
|
126.6
|
|
Selling, general
& administrative expenses (SG&A)
|
26.9
|
|
|
24.6
|
|
|
91.8
|
|
|
98.2
|
|
Restructuring
charges
|
5.0
|
|
|
—
|
|
|
8.6
|
|
|
—
|
|
Impairment charges
and loss on sale or disposal of assets
|
7.4
|
|
|
—
|
|
|
9.3
|
|
|
0.9
|
|
Other income
(expense), net
|
(31.4)
|
|
|
(37.3)
|
|
|
(23.3)
|
|
|
(18.6)
|
|
Earnings (Loss)
Before Interest and Taxes (EBIT) (1)
|
(88.7)
|
|
|
(24.6)
|
|
|
(110.4)
|
|
|
8.9
|
|
Interest
expense
|
3.7
|
|
|
4.2
|
|
|
15.7
|
|
|
17.1
|
|
Income (Loss)
Before Income Taxes
|
(92.4)
|
|
|
(28.8)
|
|
|
(126.1)
|
|
|
(8.2)
|
|
Provision (benefit)
for income taxes
|
(7.8)
|
|
|
0.6
|
|
|
(16.1)
|
|
|
1.8
|
|
Net Income
(Loss)
|
$
|
(84.6)
|
|
|
$
|
(29.4)
|
|
|
$
|
(110.0)
|
|
|
$
|
(10.0)
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
per Common Share:
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
$
|
(1.89)
|
|
|
$
|
(0.66)
|
|
|
$
|
(2.46)
|
|
|
$
|
(0.22)
|
|
Diluted earnings
(loss) per share (2)
|
$
|
(1.89)
|
|
|
$
|
(0.66)
|
|
|
$
|
(2.46)
|
|
|
$
|
(0.22)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - basic
|
44.8
|
|
|
44.6
|
|
|
44.8
|
|
|
44.6
|
|
Weighted average
shares outstanding - diluted
|
44.8
|
|
|
44.6
|
|
|
44.8
|
|
|
44.6
|
|
|
|
|
|
|
|
|
|
(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 and years
ended December 31, 2019 and 2018 because the effect of their
inclusion would have been anti-dilutive.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
(Dollars in
millions) (Unaudited)
|
December
31,
|
|
2019
|
|
2018
Adjusted
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
27.1
|
|
|
$
|
21.6
|
|
Accounts receivable,
net of allowances
|
77.5
|
|
|
163.4
|
|
Inventories,
net
|
281.9
|
|
|
374.5
|
|
Deferred charges and
prepaid expenses
|
3.3
|
|
|
3.5
|
|
Assets held for
sale
|
4.1
|
|
|
—
|
|
Other current
assets
|
7.8
|
|
|
6.1
|
|
Total Current
Assets
|
401.7
|
|
|
569.1
|
|
|
|
|
|
Property, plant and
equipment, net
|
626.4
|
|
|
674.4
|
|
Operating lease
right-of-use assets
|
14.3
|
|
|
—
|
|
Pension
assets
|
25.2
|
|
|
10.5
|
|
Intangible assets,
net
|
14.3
|
|
|
17.8
|
|
Other non-current
assets
|
3.3
|
|
|
3.5
|
|
Total
Assets
|
$
|
1,085.2
|
|
|
$
|
1,275.3
|
|
|
|
|
|
LIABILITIES
|
|
|
|
Accounts
payable
|
$69.3
|
|
|
$160.6
|
|
Salaries, wages and
benefits
|
13.9
|
|
|
36.8
|
|
Accrued pension and
postretirement costs
|
3.0
|
|
|
3.0
|
|
Current operating
lease liabilities
|
6.2
|
|
|
—
|
|
Other current
liabilities
|
19.9
|
|
|
20.4
|
|
Total Current
Liabilities
|
112.3
|
|
|
220.8
|
|
|
|
|
|
Convertible notes,
net
|
78.6
|
|
|
74.1
|
|
Credit
agreement
|
90.0
|
|
|
115.0
|
|
Non-current operating
lease liabilities
|
8.2
|
|
|
—
|
|
Accrued pension and
postretirement costs
|
222.1
|
|
|
240.0
|
|
Deferred income
taxes
|
0.9
|
|
|
0.8
|
|
Other non-current
liabilities
|
10.0
|
|
|
11.7
|
|
Total
Liabilities
|
522.1
|
|
|
662.4
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Additional paid-in
capital
|
844.8
|
|
|
846.3
|
|
Retained
deficit
|
(301.5)
|
|
|
(191.5)
|
|
Treasury
shares
|
(24.9)
|
|
|
(33.0)
|
|
Accumulated other
comprehensive income (loss)
|
44.7
|
|
|
(8.9)
|
|
Total Shareholders'
Equity
|
563.1
|
|
|
612.9
|
|
Total Liabilities and
Shareholders' Equity
|
$
|
1,085.2
|
|
|
$
|
1,275.3
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
(Dollars in
millions) (Unaudited)
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
2019
|
|
2018
Adjusted
|
|
2019
|
|
2018
Adjusted
|
CASH PROVIDED
(USED)
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(84.6)
|
|
|
$
|
(29.4)
|
|
|
$
|
(110.0)
|
|
|
$
|
(10.0)
|
|
Adjustments to
reconcile net income (loss) to net cash provided
(used)
by operating activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
20.3
|
|
|
18.0
|
|
|
73.5
|
|
|
73.0
|
|
Amortization of
deferred financing fees and debt discount
|
1.4
|
|
|
1.2
|
|
|
5.1
|
|
|
5.5
|
|
Impairment charges
and (gain) loss on sale or disposal of assets
|
7.4
|
|
|
—
|
|
|
9.3
|
|
|
0.9
|
|
Deferred income
taxes
|
(7.9)
|
|
|
0.5
|
|
|
(16.7)
|
|
|
0.8
|
|
Stock-based
compensation expense
|
2.2
|
|
|
1.4
|
|
|
7.4
|
|
|
7.3
|
|
Pension and
postretirement expense (benefit), net
|
35.6
|
|
|
41.7
|
|
|
41.6
|
|
|
37.4
|
|
Pension and
postretirement contributions and payments
|
(1.5)
|
|
|
(0.7)
|
|
|
(3.8)
|
|
|
(13.1)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
29.9
|
|
|
8.7
|
|
|
85.9
|
|
|
(13.6)
|
|
Inventories,
net
|
48.1
|
|
|
(21.7)
|
|
|
92.6
|
|
|
(94.5)
|
|
Accounts
payable
|
(6.1)
|
|
|
20.9
|
|
|
(87.7)
|
|
|
24.4
|
|
Other accrued
expenses
|
(1.3)
|
|
|
2.1
|
|
|
(26.0)
|
|
|
(3.8)
|
|
Deferred charges and
prepaid expenses
|
1.6
|
|
|
1.2
|
|
|
0.2
|
|
|
0.4
|
|
Other, net
|
0.9
|
|
|
3.0
|
|
|
(1.1)
|
|
|
3.8
|
|
Net Cash Provided
(Used) by Operating Activities
|
46.0
|
|
|
46.9
|
|
|
70.3
|
|
|
18.5
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
(16.3)
|
|
|
(22.3)
|
|
|
(38.0)
|
|
|
(40.0)
|
|
Proceeds from
disposals of property, plant and equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
Net Cash Provided
(Used) by Investing Activities
|
(16.3)
|
|
|
(22.3)
|
|
|
(38.0)
|
|
|
(39.0)
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Proceeds from
exercise of stock options
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
Shares surrendered
for employee taxes on stock compensation
|
—
|
|
|
—
|
|
|
(1.0)
|
|
|
(0.7)
|
|
Refunding Bonds
repayments
|
—
|
|
|
—
|
|
|
—
|
|
|
(30.2)
|
|
Repayments on credit
agreements
|
(20.0)
|
|
|
(30.0)
|
|
|
(65.0)
|
|
|
(105.0)
|
|
Borrowings on credit
agreements
|
—
|
|
|
—
|
|
|
40.0
|
|
|
155.0
|
|
Debt issuance
costs
|
(1.0)
|
|
|
—
|
|
|
(1.0)
|
|
|
(1.7)
|
|
Net Cash Provided
(Used) by Financing Activities
|
(21.0)
|
|
|
(30.0)
|
|
|
(26.8)
|
|
|
17.6
|
|
Increase (Decrease)
in Cash and Cash Equivalents
|
8.7
|
|
|
(5.4)
|
|
|
5.5
|
|
|
(2.9)
|
|
Cash and cash
equivalents at beginning of period
|
18.4
|
|
|
27.0
|
|
|
21.6
|
|
|
24.5
|
|
Cash and Cash
Equivalents at End of Period
|
$
|
27.1
|
|
|
$
|
21.6
|
|
|
$
|
27.1
|
|
|
$
|
21.6
|
|
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
December 31,
|
|
Year Ended
December 31,
|
|
(Dollars in
millions) (Unaudited)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net Cash Provided
(Used) by Operating Activities
|
$
|
46.0
|
|
|
$
|
46.9
|
|
|
$
|
70.3
|
|
|
$
|
18.5
|
|
Less: Capital
expenditures
|
(16.3)
|
|
|
(22.3)
|
|
|
(38.0)
|
|
|
(40.0)
|
|
Free Cash
Flow
|
$
|
29.7
|
|
|
$
|
24.6
|
|
|
$
|
32.3
|
|
|
$
|
(21.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Free Cash Flow is defined as net
cash provided (used) by operating activities less capital
expenditures.
|
Reconciliation of
adjusted net income (loss)(3) to GAAP net income (loss)
and adjusted diluted earnings (loss) per share(4) to
GAAP diluted earnings (loss) per share for the three months ended
December 31, 2019
|
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
December 31, 2019
|
(Dollars in
millions) (Unaudited)
|
|
Net income
(loss)
|
|
Cost of products
sold
|
|
Restructuring
charges
|
|
Impairment charges
and loss on sale or disposal of assets
|
|
SG&A
|
|
Other income
(expense), Net
|
|
Income tax
(benefit) expense (2)
|
|
Diluted earnings
(loss) per share
(1)
|
As
reported
|
|
$
|
(84.6)
|
|
|
$
|
244.9
|
|
|
$
|
5.0
|
|
|
$
|
7.4
|
|
|
$
|
26.9
|
|
|
$
|
(31.4)
|
|
|
$
|
(7.8)
|
|
|
$
|
(1.89)
|
|
Adjustments:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
severance and transition costs
|
|
5.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.6)
|
|
|
—
|
|
|
0.5
|
|
|
0.11
|
|
Impairment charges
and loss on sale or disposal of assets
|
|
6.7
|
|
|
—
|
|
|
—
|
|
|
(7.3)
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
0.15
|
|
Restructuring
charges
|
|
4.9
|
|
|
—
|
|
|
(5.0)
|
|
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
0.4
|
|
|
0.11
|
|
Loss from
remeasurement of benefit plans
|
|
33.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36.2)
|
|
|
3.1
|
|
|
0.74
|
|
Facility phase
down: inventory write-down
|
|
4.4
|
|
|
(4.8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.10
|
|
Accelerated
depreciation and amortization
|
|
2.6
|
|
|
(2.8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.06
|
|
Business
transformation costs
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5)
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
As
adjusted
|
|
$
|
(27.3)
|
|
|
$
|
237.3
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
20.5
|
|
|
$
|
4.8
|
|
|
$
|
(2.6)
|
|
|
$
|
(0.61)
|
|
(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 December 31, 2019, were excluded from the computation of
adjusted diluted earnings (loss) per share because the effect of
their inclusion would have been anti-dilutive.
|
(2)Income
tax (benefit) expense adjustments reflect the impact on income
taxes from the adjustments noted in footnote 3 below.
|
(3)Adjusted net income (loss) is defined
as net income (loss) excluding for the three months ended December
31, 2019, the loss from remeasurement of benefit plans,
restructuring charges, impairment charges and loss on sale or
disposal of assets, executive severance and transition costs,
facility phase down: inventory write-down, accelerated depreciation
and amortization and business transformation costs.
|
(4)Adjusted diluted earnings (loss)
per share is defined as diluted earnings (loss) per share
excluding for the three months ended December 31, 2019, the loss
from remeasurement of benefit plans, restructuring charges,
impairment charges and loss on sale or disposal of assets,
executive severance and transition costs, facility phase down:
inventory write-down, accelerated depreciation and amortization and
business transformation costs.
|
Reconciliation of
adjusted net income (loss)(3) to GAAP net income (loss)
and adjusted diluted earnings (loss) per share(4) to
GAAP diluted earnings (loss) per share for the three months ended
December 31, 2018
|
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
December 31, 2018
|
(Dollars in
millions) (Unaudited)
|
|
Net income
(loss)
|
|
Impairment charges
and loss on sale or disposal of assets
|
|
SG&A
|
|
Other income
(expense), Net
|
|
Income tax
(benefit) expense(2)
|
|
Diluted earnings
(loss) per share (1)
|
As reported
(Adjusted)
|
|
$
|
(29.4)
|
|
|
$
|
—
|
|
|
$
|
24.6
|
|
|
$
|
(37.3)
|
|
|
$
|
0.6
|
|
|
$
|
(0.66)
|
|
Adjustments:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
remeasurement of benefit plans
|
|
43.5
|
|
|
—
|
|
|
—
|
|
|
(43.5)
|
|
|
—
|
|
|
0.96
|
|
As
adjusted
|
|
$
|
14.1
|
|
|
$
|
—
|
|
|
$
|
24.6
|
|
|
$
|
6.2
|
|
|
$
|
0.6
|
|
|
$
|
0.30
|
|
(1)Common
share equivalents for shares issuable upon the conversion of
outstanding convertible notes for the three months ended December
31, 2018, were excluded from the computation of adjusted diluted
earnings (loss) per share because the effect of their inclusion
would have been anti-dilutive.
|
(2)These
adjustments have a $0 net tax effect, since the company has Net
Operating Loss carryforwards.
|
(3)Adjusted net income (loss) is defined
as net income (loss) excluding loss from remeasurement of benefit
plans for the three months ended December 31, 2018.
|
(4)Adjusted diluted earnings (loss) per
share is defined as diluted earnings (loss) per share excluding
loss from remeasurement of benefit plans for the three months ended
December 31, 2018.
|
Reconciliation of
adjusted net income (loss)(3) to GAAP net income (loss)
and adjusted diluted earnings (loss) per share(4) to
GAAP diluted earnings (loss) per share for the year ended December
31, 2019
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2019
|
(Dollars in
millions)
(Unaudited)
|
|
Net income
(loss)
|
|
Cost of products
sold
|
|
Restructuring
charges
|
|
Impairment charges
and loss on sale or disposal of assets
|
|
SG&A
|
|
Other income
(expense), Net
|
|
Income tax
(benefit) expense (2)
|
|
Diluted earnings
(loss) per share
(1)
|
As
reported
|
|
$
|
(110.0)
|
|
|
$
|
1,186.2
|
|
|
$
|
8.6
|
|
|
$
|
9.3
|
|
|
$
|
91.8
|
|
|
$
|
(23.3)
|
|
|
$
|
(16.1)
|
|
|
$
|
(2.46)
|
|
Adjustments:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
severance and transition costs
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.6)
|
|
|
—
|
|
|
0.7
|
|
|
0.11
|
|
Impairment charges
and loss on sale or disposal of assets
|
|
7.8
|
|
|
—
|
|
|
—
|
|
|
(8.9)
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|
0.17
|
|
Restructuring
charges
|
|
7.8
|
|
|
—
|
|
|
(8.6)
|
|
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
1.1
|
|
|
0.17
|
|
Loss from
remeasurement of benefit plans
|
|
35.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40.6)
|
|
|
5.2
|
|
|
0.79
|
|
Facility phase
down: inventory write-down
|
|
4.2
|
|
|
(4.8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
0.09
|
|
Accelerated
depreciation and amortization
|
|
2.4
|
|
|
(2.8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.05
|
|
Business
transformation costs
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5)
|
|
|
—
|
|
|
0.1
|
|
|
0.01
|
|
As
adjusted
|
|
$
|
(47.1)
|
|
|
$
|
1,178.6
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
85.4
|
|
|
$
|
17.3
|
|
|
$
|
(6.9)
|
|
|
$
|
(1.07)
|
|
(1)Common
share equivalents for shares issuable upon the conversion of
outstanding convertible notes and equity-based awards for the year
ended December 31, 2019, were excluded from the computation of
adjusted diluted earnings (loss) per share because the effect of
their inclusion would have been anti-dilutive.
|
(2)Income
tax (benefit) expense adjustments reflect the impact on income
taxes from the adjustments noted in footnote 3 below.
|
(3)Adjusted net income (loss) is defined
as net income (loss) excluding for the year ended December 31,
2019, the loss from remeasurement of benefit plans, restructuring
charges, impairment charges and loss on sale or disposal of assets,
executive severance and transition costs, facility phase down:
inventory write-down, accelerated depreciation and amortization and
business transformation costs.
|
(4)Adjusted diluted earnings (loss) per
share is defined as diluted earnings (loss) per share excluding for
the year ended December 31, 2019, the loss from remeasurement of
benefit plans, restructuring charges, impairment charges and loss
on sale or disposal of assets, executive severance and transition
costs, facility phase down: inventory write-down, accelerated
depreciation and amortization and business transformation
costs.
|
Reconciliation of
adjusted net income (loss)(3) to GAAP net income (loss)
and adjusted diluted earnings (loss) per share(4) to
GAAP diluted earnings (loss) per share for the year ended December
31, 2018
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2018
|
(Dollars in
millions)
(Unaudited)
|
|
Net income
(loss)
|
|
Impairment charges
and loss on sale or disposal of assets
|
|
SG&A
|
|
Other income
(expense), Net
|
|
Income tax
(benefit) expense(2)
|
|
Diluted earnings
(loss) per share (1)
|
As reported
(Adjusted)
|
|
$
|
(10.0)
|
|
|
$
|
0.9
|
|
|
$
|
98.2
|
|
|
$
|
(18.6)
|
|
|
$
|
1.8
|
|
|
$
|
0.17
|
|
Adjustments:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
severance
|
|
1.7
|
|
|
—
|
|
|
(1.7)
|
|
|
—
|
|
|
—
|
|
|
0.04
|
|
Loss from
remeasurement of benefit plans
|
|
43.5
|
|
|
—
|
|
|
—
|
|
|
(43.5)
|
|
|
—
|
|
|
0.96
|
|
As
adjusted
|
|
$
|
35.2
|
|
|
$
|
0.9
|
|
|
$
|
96.5
|
|
|
$
|
24.9
|
|
|
$
|
1.8
|
|
|
$
|
1.17
|
|
(1)Common
share equivalents for shares issuable upon the conversion of
outstanding convertible notes for the year ended December 31, 2018,
were excluded from the computation of adjusted diluted earnings
(loss) per share because the effect of their inclusion would have
been anti-dilutive.
|
(2)These
adjustments have a $0 net tax effect, since the company has Net
Operating Loss carryforwards.
|
(3)Adjusted net income (loss) is defined
as net income (loss) excluding executive severance and loss from
remeasurement of benefit plans for the year ended December 31,
2018.
|
(4)Adjusted diluted earnings (loss) per
share is defined as diluted earnings (loss) per share excluding
executive severance and loss from remeasurement of benefit plans
for the year ended December 31, 2018.
|
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
December 31,
|
|
Year Ended
December 31,
|
|
Three Months
Ended
September
30,
|
(Dollars in
millions) (Unaudited)
|
2019
|
|
2018
Adjusted
|
|
2019
|
|
2018
Adjusted
|
|
2019
Adjusted
|
Net income
(loss)
|
$
|
(84.6)
|
|
|
$
|
(29.4)
|
|
|
$
|
(110.0)
|
|
|
$
|
(10.0)
|
|
|
$
|
(17.0)
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
(7.8)
|
|
|
0.6
|
|
|
(16.1)
|
|
|
1.8
|
|
|
(5.5)
|
|
Interest
expense
|
3.7
|
|
|
4.2
|
|
|
15.7
|
|
|
17.1
|
|
|
3.6
|
|
Earnings Before
Interest and Taxes (EBIT) (1)
|
$
|
(88.7)
|
|
|
$
|
(24.6)
|
|
|
$
|
(110.4)
|
|
|
$
|
8.9
|
|
|
$
|
(18.9)
|
|
EBIT Margin
(1)
|
(39.1)
|
%
|
|
(6.1)
|
%
|
|
(9.1)
|
%
|
|
0.6
|
%
|
|
(6.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
20.3
|
|
|
18.0
|
|
|
73.5
|
|
|
73.0
|
|
|
17.5
|
|
Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA)
(2)
|
$
|
(68.4)
|
|
|
$
|
(6.6)
|
|
|
$
|
(36.9)
|
|
|
$
|
81.9
|
|
|
$
|
(1.4)
|
|
EBITDA Margin
(2)
|
(30.1)
|
%
|
|
(1.6)
|
%
|
|
(3.1)
|
%
|
|
5.1
|
%
|
|
(0.5)
|
%
|
Executive severance
and transition costs
|
(5.6)
|
|
|
—
|
|
|
(5.6)
|
|
|
(1.7)
|
|
|
—
|
|
Impairment charges
and loss on sale or disposal of assets
|
(7.3)
|
|
|
—
|
|
|
(8.9)
|
|
|
—
|
|
|
—
|
|
Restructuring
charges
|
(5.3)
|
|
|
—
|
|
|
(8.9)
|
|
|
—
|
|
|
—
|
|
Loss from
remeasurement of benefit plans
|
(36.2)
|
|
|
(43.5)
|
|
|
(40.6)
|
|
|
(43.5)
|
|
|
—
|
|
Facility phase down:
Inventory write-down
|
(4.8)
|
|
|
—
|
|
|
(4.8)
|
|
|
—
|
|
|
—
|
|
Accelerated
depreciation and amortization
(EBIT
only)
|
(2.8)
|
|
|
—
|
|
|
(2.8)
|
|
|
—
|
|
|
—
|
|
Business
transformation costs
|
(0.5)
|
|
|
—
|
|
|
(0.5)
|
|
|
—
|
|
|
—
|
|
Adjusted EBIT
(3)
|
$
|
(26.2)
|
|
|
$
|
18.9
|
|
|
$
|
(38.3)
|
|
|
$
|
54.1
|
|
|
$
|
(18.9)
|
|
Adjusted EBIT Margin
(3)
|
(11.5)
|
%
|
|
4.7
|
%
|
|
(3.2)
|
%
|
|
3.4
|
%
|
|
(6.9)
|
%
|
Adjusted EBITDA
(4)
|
$
|
(8.7)
|
|
|
$
|
36.9
|
|
|
$
|
32.4
|
|
|
$
|
127.1
|
|
|
$
|
(1.4)
|
|
Adjusted EBITDA
Margin (4)
|
(3.8)
|
%
|
|
9.1
|
%
|
|
2.7
|
%
|
|
7.9
|
%
|
|
(0.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
(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, the loss from
remeasurement of benefit plans, restructuring charges, impairment
charges and loss on sale or disposal of assets, facility phase
down: inventory write-down, accelerated depreciation and
amortization and business transformation costs. 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, the loss from remeasurement of benefit plans, restructuring
charges, impairment charges and loss on sale or disposal of assets,
facility phase down: inventory write-down and business
transformation costs. 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)
|
December
31,
2019
|
December
31,
2018
|
|
Cash and cash
equivalents
|
$27.1
|
|
$21.6
|
|
|
|
|
|
|
Credit
Agreement:
|
|
|
|
Maximum
availability
|
$400.0
|
|
$300.0
|
|
|
Suppressed
availability(2)
|
(103.0)
|
|
—
|
|
|
Availability
|
297.0
|
|
300.0
|
|
|
Credit facility
amount borrowed
|
(90.0)
|
|
(115.0)
|
|
|
Letter of credit
obligations
|
(3.8)
|
|
(2.6)
|
|
|
Availability not
borrowed
|
203.2
|
|
182.4
|
|
|
|
|
|
|
Total
liquidity
|
$230.3
|
|
$204.0
|
|
|
|
|
|
|
|
|
|
|
(1) Total
Liquidity is defined as available borrowing capacity plus cash and
cash equivalents.
|
|
(2) As of December 31, 2019,
TimkenSteel had less than $400 million in collateral assets to
borrow against.
|
|
ADJUSTED
EBITDA(1) WALKS
|
(Dollars in
millions) (Unaudited)
|
2018 4Q vs.
2019 4Q
|
|
2019 3Q vs. 2019
4Q
|
|
Full Year 2018 vs.
2019
|
Beginning Adjusted
EBITDA(1)
|
$
|
37
|
|
|
$
|
(1)
|
|
|
$
|
127
|
|
SG&A
|
4
|
|
|
1
|
|
|
11
|
|
Price/Mix
|
1
|
|
|
(1)
|
|
|
47
|
|
Volume
|
(20)
|
|
|
(7)
|
|
|
(40)
|
|
Raw Material
Spread
|
(16)
|
|
|
(3)
|
|
|
(49)
|
|
Manufacturing
|
(13)
|
|
|
2
|
|
|
(54)
|
|
Other
|
(2)
|
|
|
—
|
|
|
(10)
|
|
Ending Adjusted
EBITDA(1)
|
$
|
(9)
|
|
|
$
|
(9)
|
|
|
$
|
32
|
|
|
|
|
|
|
|
(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).
|
Reconciliation of
Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) (1) to GAAP Net Income:
|
This reconciliation
is provided as additional relevant information about the company's
first quarter guidance. EBITDA 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 EBITDA is useful to
investors as this measure is representative of the company's
performance. Management also believes that it is appropriate to
compare GAAP net income (loss) to EBITDA.
|
|
Three Months
Ended
March 31, 2020
|
(Dollars in
millions) (Unaudited)
|
|
Low
|
|
High
|
Net loss
|
$
|
(22.0)
|
|
|
$
|
(12.0)
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
—
|
|
|
—
|
|
Interest
expense
|
4.0
|
|
|
4.0
|
|
Depreciation and
amortization
|
18.0
|
|
|
18.0
|
|
Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA)
(1)
|
$
|
—
|
|
|
$
|
10.0
|
|
|
|
|
|
(1) EBITDA is defined as net income
(loss) before interest expense, income taxes, depreciation and
amortization.
|
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SOURCE TimkenSteel Corp.