- Net sales of $352.0 million in
the first quarter reflect strength in customer demand and higher
base prices
- Net income of $37.1 million
with adjusted EBITDA(1) of $65.3 million
- Operating cash flow of $13.3
million
CANTON,
Ohio, May 4, 2022 /PRNewswire/ -- TimkenSteel
(NYSE: TMST), a leader in high-quality specialty steel,
manufactured components, and supply chain solutions, today reported
first-quarter 2022 net sales of $352.0
million and net income of $37.1
million, or $0.70 per diluted
share. On an adjusted basis(1), first-quarter 2022 net
income was $48.6 million, or
$0.92 per diluted share, and adjusted
EBITDA was $65.3 million.
This compares with fourth-quarter 2021 net sales of $338.3 million and net income of $57.1 million, or $1.07 per diluted share. On an adjusted
basis(1), fourth-quarter 2021 net income was
$42.3 million, or $0.80 per diluted share, and adjusted EBITDA was
$62.1 million.
In the same quarter last year, net sales were $273.6 million with net income of $9.8 million, or $0.20 per diluted share. On an adjusted
basis(1), first-quarter 2021 net income was $22.6 million, or $0.43 per diluted share, and adjusted EBITDA was
$40.8 million.
"I am pleased we began the year with strong profitability
despite melt shop interruptions early in the first quarter. Our
team performed well in a high demand environment, and we continued
to meet the needs of customers while keeping safety at the
forefront," said Mike Williams,
president and chief executive officer. "Market demand and pricing
remain favorable, and we are relentlessly working to improve our
commercial and manufacturing effectiveness to ensure sustainable
success throughout the year and beyond."
FIRST-QUARTER 2022 FINANCIAL SUMMARY
- Net sales of $352.0
million increased 4 percent compared with $338.3 million in the fourth quarter of 2021,
primarily driven by higher base sales prices partially offset by a
reduction in average raw material surcharge per ton as a result of
lower scrap prices. Compared with the prior-year first quarter, net
sales increased 29 percent primarily driven by an increase in
average raw material surcharge per ton as a result of higher scrap
and alloy prices, an increase in base sales prices, and improved
industrial and energy demand.
- Ship tons of 196,400 decreased 1,900 tons sequentially,
or 1 percent, consistent with expectations and driven by lower
industrial shipments more than offsetting higher mobile and energy
shipments. Compared with the prior-year first quarter, total ship
tons increased 2 percent with increases in industrial and energy
demand partially offset by lower mobile shipments.
- Manufacturing costs decreased sequentially by
$5.2 million primarily driven by
increased fixed cost leverage on higher production volume in the
first quarter of 2022 and the planned annual Faircrest plant
maintenance shutdown completed in the fourth quarter of 2021,
partially offset by inflationary costs. Melt utilization was 81
percent in the first quarter of 2022, an improvement from the
prior-year fourth and first quarters. Compared with the prior-year
first quarter, manufacturing costs increased $2.9 million primarily driven by inflationary
costs.
- SG&A expense was $18.5
million, a $1.7 million
sequential increase primarily driven by higher benefits and
share-based compensation expense. Compared with the prior-year
first quarter, SG&A expense decreased by $1.0 million largely due to lower employee
expense as a result of prior restructuring actions.
(1) Please see discussion of non-GAAP financial
measures in this news release.
CASH, LIQUIDITY AND REPURCHASE ACTIVITY
As of March 31, 2022, the
company's cash balance was $239.9
million. In the first quarter of 2022, operating cash
flow was $13.3 million driven by
profitability, partially offset by a use of cash for working
capital purposes and the cash payment of variable compensation
earned in 2021, as expected. Total liquidity(2)
was $522.8 million as of March 31, 2022.
In the first quarter, the company repurchased $10.0 million aggregate principal amount of its
convertible notes at a cash cost of $26.8
million. As of March 31, 2022,
the outstanding principal balance of convertible notes was
$36.0 million. As a result of
the first quarter convertible note repurchases, diluted shares
outstanding will decline by approximately 1.3 million shares in the
second quarter of 2022.
Additionally, during the first quarter, the company repurchased
approximately 170,000 common shares at an aggregate cost of
$3.4 million. In April, the
company repurchased approximately 137,000 common shares at an
aggregate cost of $3.0 million. As of
April 30, 2022, the company had
$43.6 million remaining under its
previously approved $50.0 million
share repurchase program.
2022 OUTLOOK
Given the elements outlined in the outlook below, the company
expects to report a sequential increase in adjusted EBITDA and
positive operating cash flow in the second quarter of 2022.
Commercial:
- Customer demand – remains solid across all end markets, as
evidenced by a full order book through the end of the third quarter
of 2022.
- Ship tons – expect a sequential increase in second-quarter
shipments. Periodic customer manufacturing disruptions may continue
to negatively impact shipments.
- Base price per ton – expect second-quarter base price per ton
to be similar to slightly higher, compared with the first quarter
of 2022.
- Surcharge revenue per ton – expect a second-quarter sequential
increase as a result of higher scrap and alloy prices.
Operations:
- Melt utilization – expected to be above 85 percent during the
second quarter.
- Inflationary pressure – anticipated to continue on commodities,
consumables and other manufacturing costs.
Cash:
- Operating cash flow – expected to be positive in the second
quarter primarily driven by profitability and continued disciplined
working capital management.
- Capital expenditures – expected to be approximately
$40 million in 2022, consistent with
previous guidance.
(2) The company defines total liquidity as available
borrowing capacity plus cash and cash equivalents.
TIMKENSTEEL EARNINGS WEBCAST INFORMATION
TimkenSteel will provide live Internet listening access to its
conference call with the financial community scheduled for
Thursday, May 5, 2022, at
9:00 a.m. ET. The live conference
call will be broadcast at investors.timkensteel.com. A replay of
the conference call will also be available at
investors.timkensteel.com.
ABOUT TIMKENSTEEL CORPORATION
TimkenSteel (NYSE: TMST) manufactures high-performance carbon
and alloy steel products from recycled scrap metal in Canton, OH, serving demanding applications in
mobile, 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 manufactured components.
In the business of making high-quality steel for more than 100
years, TimkenSteel's proven expertise contributes to the
performance of our customers' products. The company employs
approximately 1,800 people and had sales of $1.3 billion in 2021. 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, free cash flow and
base sales. 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," "aspire," "believe," "could,"
"estimate," "expect," "forecast," "outlook," "intend," "may,"
"plan," "possible," "potential," "predict," "project," "seek,"
"target," "should," "would," "strategy," or "strategic direction"
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 and financial results, including cash flows 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; climate-related risks, including
environmental and severe weather caused by climate changes, and
legislative and regulatory initiatives addressing global climate
change or other environmental concerns; 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
including but not limited to changes in customer operating
schedules due to supply chain constraints, 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, and the company's ability to
maintain appropriate relations with the union that represents 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, employment matters, and
environmental issues and taxes, among other matters; cyber-related
risks, including information technology system failures,
interruptions and security breaches; the company's ability to
achieve its environmental, social, and governance ("ESG") goals,
including its 2030 ESG goals; the availability of financing and
interest rates, which affect the company's cost of funds and/or
ability to raise capital, including the ability of the company to
refinance or repay at maturity the convertible notes due
December 1, 2025; 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
overall impact of pension and other postretirement benefit
mark-to-market accounting; the effects of the conditional
conversion feature of the convertible notes due December 1, 2025, which, if triggered, entitles
holders to convert the notes at any time during specified periods
at their option and therefore could result in potential dilution if
the holder elects to convert and the company elects to satisfy a
portion or all of the conversion obligation by delivering common
shares instead of cash; and the impacts from any repurchases of our
common shares, including the timing and amount of any repurchases.
Further, this news release represents our current policy and intent
and is not intended to create legal rights or obligations. Certain
standards of measurement and performance contained in this news
release are developing and based on assumptions, and no assurance
can be given that any plan, objective, initiative, projection,
goal, mission, commitment, expectation, or prospect set forth in
this news release can or will be achieved. Inclusion of information
in this news release is not an indication that the subject or
information is material to our business or operating
results.
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)
|
|
2022
|
|
|
2021
|
|
Net sales
|
|
$
|
352.0
|
|
|
$
|
273.6
|
|
Cost of products
sold
|
|
|
292.0
|
|
|
|
242.9
|
|
Gross
Profit
|
|
|
60.0
|
|
|
|
30.7
|
|
Selling, general &
administrative expenses (SG&A)
|
|
|
18.5
|
|
|
|
19.5
|
|
Restructuring
charges
|
|
|
0.4
|
|
|
|
0.5
|
|
Loss (gain) on sale or
disposal of assets, net
|
|
|
0.1
|
|
|
|
—
|
|
Impairment
charges
|
|
|
—
|
|
|
|
8.2
|
|
Loss on extinguishment
of debt
|
|
|
17.0
|
|
|
|
—
|
|
Other (income) expense,
net
|
|
|
(15.2)
|
|
|
|
(9.4)
|
|
Earnings (Loss) Before Interest
and Taxes (EBIT) (1)
|
|
|
39.2
|
|
|
|
11.9
|
|
Interest
expense
|
|
|
1.2
|
|
|
|
1.9
|
|
Income (Loss) Before Income
Taxes
|
|
|
38.0
|
|
|
|
10.0
|
|
Provision (benefit) for
income taxes
|
|
|
0.9
|
|
|
|
0.2
|
|
Net Income
(Loss)
|
|
$
|
37.1
|
|
|
$
|
9.8
|
|
|
|
|
|
|
|
|
Net Income (Loss) per Common
Share:
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
|
$
|
0.80
|
|
|
$
|
0.22
|
|
Diluted earnings (loss)
per share (2)
|
|
$
|
0.70
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding - basic
|
|
|
46.4
|
|
|
|
45.4
|
|
Weighted average shares
outstanding - diluted
|
|
|
53.8
|
|
|
|
55.7
|
|
|
|
(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)
|
For the three months
ended March 31, 2022 and March 31, 2021, common share equivalents
for shares issuable upon the conversion of outstanding convertible
notes (5.2 million shares and 9.1 million shares, respectively) and
common share equivalents for shares issuable for equity-based
awards (2.2 million shares and 1.2 million shares, respectively)
were included in the computation of diluted earnings (loss) per
share, as they were considered dilutive. For the convertible notes,
the company utilizes the if-converted method to calculate diluted
earnings (loss) per share. As such, net income was adjusted to add
back $0.7 million and $1.3 million for the three months ended March
31, 2022 and March 31, 2021, respectively, of convertible notes
interest expense (including amortization of convertible notes
issuance costs).
|
CONSOLIDATED BALANCE SHEETS
|
|
(Dollars in millions)
(Unaudited)
|
|
March 31, 2022
|
|
|
December 31, 2021
|
|
ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
239.9
|
|
|
$
|
259.6
|
|
Accounts receivable, net of allowances
|
|
|
135.1
|
|
|
|
100.5
|
|
Inventories, net
|
|
|
230.1
|
|
|
|
210.9
|
|
Deferred charges and prepaid expenses
|
|
|
3.6
|
|
|
|
3.9
|
|
Assets held for sale
|
|
|
4.3
|
|
|
|
4.3
|
|
Other current assets
|
|
|
2.2
|
|
|
|
3.1
|
|
Total Current Assets
|
|
|
615.2
|
|
|
|
582.3
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
500.8
|
|
|
|
510.2
|
|
Operating lease right-of-use assets
|
|
|
13.8
|
|
|
|
14.5
|
|
Pension assets
|
|
|
48.2
|
|
|
|
43.1
|
|
Intangible assets, net
|
|
|
6.1
|
|
|
|
6.7
|
|
Other non-current assets
|
|
|
1.9
|
|
|
|
2.1
|
|
Total Assets
|
|
$
|
1,186.0
|
|
|
$
|
1,158.9
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
168.5
|
|
|
$
|
141.9
|
|
Salaries, wages and benefits
|
|
|
21.2
|
|
|
|
37.9
|
|
Accrued pension and postretirement costs
|
|
|
2.6
|
|
|
|
4.3
|
|
Current operating lease liabilities
|
|
|
5.7
|
|
|
|
5.7
|
|
Current convertible notes, net
|
|
|
35.2
|
|
|
|
44.9
|
|
Other current liabilities
|
|
|
13.0
|
|
|
|
16.1
|
|
Total Current
Liabilities
|
|
|
246.2
|
|
|
|
250.8
|
|
|
|
|
|
|
|
|
Credit agreement
|
|
|
—
|
|
|
|
—
|
|
Non-current operating lease liabilities
|
|
|
8.1
|
|
|
|
8.8
|
|
Accrued pension and postretirement costs
|
|
|
217.3
|
|
|
|
223.0
|
|
Deferred income taxes
|
|
|
2.1
|
|
|
|
2.2
|
|
Other non-current liabilities
|
|
|
9.1
|
|
|
|
9.5
|
|
Total Liabilities
|
|
|
482.8
|
|
|
|
494.3
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
840.3
|
|
|
|
832.1
|
|
Retained deficit
|
|
|
(151.1)
|
|
|
|
(188.2)
|
|
Treasury shares
|
|
|
(4.8)
|
|
|
|
—
|
|
Accumulated other comprehensive income (loss)
|
|
|
18.8
|
|
|
|
20.7
|
|
Total Shareholders'
Equity
|
|
|
703.2
|
|
|
|
664.6
|
|
Total Liabilities and
Shareholders' Equity
|
|
$
|
1,186.0
|
|
|
$
|
1,158.9
|
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
(Dollars in millions)
(Unaudited)
|
|
Three Months Ended
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
CASH PROVIDED (USED)
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
37.1
|
|
|
$
|
9.8
|
|
Adjustments to
reconcile net income (loss) to net cash provided (used) by
operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
14.6
|
|
|
|
17.6
|
|
Amortization of
deferred financing fees
|
|
|
0.2
|
|
|
|
0.3
|
|
Loss on extinguishment
of debt
|
|
|
17.0
|
|
|
|
—
|
|
Loss (gain) on sale or
disposal of assets, net
|
|
|
0.1
|
|
|
|
—
|
|
Impairment
charges
|
|
|
—
|
|
|
|
8.2
|
|
Deferred income
taxes
|
|
|
(0.1)
|
|
|
|
—
|
|
Stock-based
compensation expense
|
|
|
2.1
|
|
|
|
1.8
|
|
Pension and
postretirement expense (benefit), net
|
|
|
(10.7)
|
|
|
|
(4.7)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(34.4)
|
|
|
|
(33.0)
|
|
Inventories, net
|
|
|
(19.0)
|
|
|
|
(28.2)
|
|
Accounts payable
|
|
|
28.3
|
|
|
|
48.1
|
|
Other accrued expenses
|
|
|
(20.1)
|
|
|
|
(2.4)
|
|
Pension and postretirement contributions and
payments
|
|
|
(3.7)
|
|
|
|
(1.6)
|
|
Deferred charges and prepaid expenses
|
|
|
0.3
|
|
|
|
0.3
|
|
Other, net
|
|
|
1.6
|
|
|
|
(3.0)
|
|
Net Cash Provided (Used) by
Operating Activities
|
|
|
13.3
|
|
|
|
13.2
|
|
Investing Activities
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(6.5)
|
|
|
|
(2.3)
|
|
Net Cash Provided (Used) by
Investing Activities
|
|
|
(6.5)
|
|
|
|
(2.3)
|
|
Financing Activities
|
|
|
|
|
|
|
Purchase of treasury
shares
|
|
|
(3.4)
|
|
|
|
—
|
|
Proceeds from exercise
of stock options
|
|
|
6.3
|
|
|
|
2.5
|
|
Shares surrendered for
employee taxes on stock compensation
|
|
|
(1.6)
|
|
|
|
(0.5)
|
|
Repayments on
convertible notes
|
|
|
(26.8)
|
|
|
|
—
|
|
Net Cash Provided
(Used) by Financing Activities
|
|
|
(25.5)
|
|
|
|
2.0
|
|
Increase (Decrease) in Cash, Cash
Equivalents, and Restricted Cash
|
|
|
(18.7)
|
|
|
|
12.9
|
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
|
|
259.6
|
|
|
|
102.8
|
|
Cash, Cash Equivalents, and
Restricted Cash at End of Period
|
|
$
|
240.9
|
|
|
$
|
115.7
|
|
|
|
|
|
|
|
|
The following table
provides a reconciliation of cash, cash equivalents, and restricted
cash reported within the Consolidated
Balance Sheets that sum to the total of the same such amounts shown
in the Consolidated Statements of Cash Flows:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
239.9
|
|
|
$
|
115.7
|
|
Restricted cash
reported in other current assets
|
|
|
1.0
|
|
|
|
—
|
|
Total cash, cash
equivalents, and restricted cash shown in the Consolidated
Statements of Cash Flows
|
|
$
|
240.9
|
|
|
$
|
115.7
|
|
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)
|
|
2022
|
|
|
2021
|
|
Net Cash Provided
(Used) by Operating Activities
|
|
$
|
13.3
|
|
|
$
|
13.2
|
|
Less: Capital
expenditures
|
|
|
(6.5)
|
|
|
|
(2.3)
|
|
Free Cash
Flow
|
|
$
|
6.8
|
|
|
$
|
10.9
|
|
|
|
(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(3) to GAAP diluted earnings (loss) per share for
the three months ended March 31,
2022, March 31, 2021, and
December 31, 2021
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. Management believes this data provides investors with
additional useful information on the underlying operations and
trends of the business and enables period-to-period comparability
of the company's financial performance.
Three months ended March 31,
2022
|
|
(Dollars in millions)
(Unaudited)
|
|
Net
income
(loss)
|
|
|
SG&A
|
|
|
Restructuring
charges
|
|
|
Loss (gain)
on sale or
disposal of
assets, net
|
|
|
|
Loss on
extinguishment
of debt
|
|
|
Other
expense
(income),
net
|
|
|
Diluted
earnings
(loss) per
share(1)
|
|
As reported
|
|
$
|
37.1
|
|
|
$
|
18.5
|
|
|
$
|
0.4
|
|
|
$
|
0.1
|
|
|
|
$
|
17.0
|
|
|
$
|
(15.2)
|
|
|
$
|
0.70
|
|
Adjustments:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
0.4
|
|
|
|
—
|
|
|
|
(0.4)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
Loss on sale or disposal of
assets(6)
|
|
|
0.1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.1)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.00
|
|
Loss on extinguishment of debt
|
|
|
17.0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(17.0)
|
|
|
|
—
|
|
|
|
0.32
|
|
Gain from remeasurement of benefit
plans
|
|
|
(6.5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
6.5
|
|
|
|
(0.12)
|
|
Business transformation
costs(2)
|
|
|
0.5
|
|
|
|
(0.5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
As adjusted
|
|
$
|
48.6
|
|
|
$
|
18.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
(8.7)
|
|
|
$
|
0.92
|
|
Three months ended March 31,
2021
|
|
(Dollars in millions)
(Unaudited)
|
|
Net
income
(loss)
|
|
|
Cost of
products
sold
|
|
|
SG&A
|
|
|
Restructuring
charges
|
|
|
Impairment
charges
|
|
|
Other
expense
(income),
net
|
|
|
Diluted
earnings
(loss) per
share(4)
|
|
As reported
|
|
$
|
9.8
|
|
|
$
|
242.9
|
|
|
$
|
19.5
|
|
|
$
|
0.5
|
|
|
$
|
8.2
|
|
|
$
|
(9.4)
|
|
|
$
|
0.20
|
|
Adjustments:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
0.5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
Accelerated depreciation and
amortization
|
|
|
1.5
|
|
|
|
(1.5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.03
|
|
Loss from remeasurement of benefit
plans
|
|
|
0.2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.2)
|
|
|
|
0.00
|
|
Write-down of supplies
inventory
|
|
|
2.1
|
|
|
|
(2.1)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.04
|
|
Business transformation
costs(2)
|
|
|
0.3
|
|
|
|
—
|
|
|
|
(0.3)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.00
|
|
TMS impairment charges
|
|
|
0.3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.3)
|
|
|
|
—
|
|
|
|
0.01
|
|
Harrison melt impairment
charges
|
|
|
7.9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7.9)
|
|
|
|
—
|
|
|
|
0.14
|
|
As adjusted
|
|
$
|
22.6
|
|
|
$
|
239.3
|
|
|
$
|
19.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9.6)
|
|
|
$
|
0.43
|
|
Three months ended December 31,
2021
|
|
(Dollars in millions)
(Unaudited)
|
|
Net
income
(loss)
|
|
|
Cost of
products
sold
|
|
|
SG&A
|
|
|
Restructuring
charges
|
|
|
Loss
(gain) on
sale or
disposal
of assets,
net
|
|
|
Impairment
charges
|
|
|
Other
(income)
expense,
net
|
|
|
Diluted
earnings
(loss)
per
share(5)
|
|
As reported
|
|
$
|
57.1
|
|
|
$
|
282.9
|
|
|
$
|
16.8
|
|
|
$
|
4.7
|
|
|
$
|
0.8
|
|
|
$
|
2.4
|
|
|
$
|
(31.2)
|
|
|
$
|
1.07
|
|
Adjustments:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
4.7
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4.7)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.09
|
|
Gain from remeasurement of benefit
plans
|
|
|
(22.3)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22.3
|
|
|
|
(0.41)
|
|
Business transformation
costs(2)
|
|
|
0.6
|
|
|
|
—
|
|
|
|
(0.6)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
Customer program early
termination
|
|
|
1.4
|
|
|
|
1.0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2.4)
|
|
|
|
—
|
|
|
|
0.03
|
|
Gain on sale of TMS assets
|
|
|
(0.1)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.01)
|
|
Loss on sale or disposal of
assets(6)
|
|
|
0.9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.9)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
As adjusted
|
|
$
|
42.3
|
|
|
$
|
283.9
|
|
|
$
|
16.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(8.9)
|
|
|
$
|
0.80
|
|
|
|
(1)
|
For the three months
ended March 31, 2022, common share equivalents for shares issuable
upon the conversion of outstanding convertible notes (5.2 million
shares) and common share equivalents for shares issuable for
equity-based awards (2.2 million shares) were included in the
computation of as reported and as adjusted diluted earnings (loss)
per share, as they were considered dilutive. The total diluted
weighted average shares outstanding for the three months ended
March 31, 2022 was 53.8 million shares. For the convertible notes,
the company utilizes the if-converted method to calculate diluted
earnings (loss) per share. As such, net income was adjusted to add
back $0.7 million of convertible notes interest expense (including
amortization of convertible notes issuance costs).
|
|
|
(2)
|
Business transformation
costs consist of items that are non-routine in nature. These costs
are primarily related to professional service fees associated with
organizational changes.
|
|
|
(3)
|
Adjusted net income
(loss) and adjusted diluted earnings (loss) per share are defined
as net income (loss) and diluted earnings (loss) per share,
respectively, excluding, as applicable, adjustments listed in the
foregoing table. Other adjusted items referred to in the foregoing
tables are also defined as the applicable item excluding any
adjustments listed in the foregoing tables with respect to such
item.
|
|
|
(4)
|
For the three months
ended March 31, 2021, common share equivalents for shares issuable
upon the conversion of outstanding convertible notes (9.1 million
shares) and common share equivalents for shares issuable for
equity-based awards (1.2 million shares) were included in the
computation of adjusted diluted earnings (loss) per share, as they
were considered dilutive. The total diluted weighted average shares
outstanding for the three months ended March 31, 2021 was 55.7
million shares. For the convertible notes, the Company utilizes the
if-converted method to calculated diluted earnings (loss) per
share. As such, net income was adjusted to add back $1.3 million of
convertible debt interest expense (including amortization of
convertible notes issuance costs).
|
|
|
(5)
|
For the three months
ended December 31, 2021, common share equivalents for shares
issuable upon the conversion of outstanding convertible notes (5.9
million shares) and common share equivalents for shares issuable
for equity-based awards (2.0 million shares) were included in the
computation of as reported and as adjusted diluted earnings (loss)
per share, as they were considered dilutive. The total diluted
weighted average shares outstanding for the three months ended
December 31, 2021 was 54.1 million shares. For the convertible
notes, the company utilizes the if-converted method to calculate
diluted earnings (loss) per share. As such, net income was adjusted
to add back $0.8 million of convertible notes interest expense
(including amortization of convertible notes issuance
costs).
|
|
|
(6)
|
For the three months
ended March 31, 2022, loss on sale or disposal of assets consisted
of write-offs of aged assets. For the three months ended December
31, 2021, loss on sale or disposal of assets consisted of losses
incurred related to older excess assets sold via an auction
process.
|
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)
|
|
2022
|
|
|
2021
|
|
|
2021
|
|
Net income
(loss)
|
|
$
|
37.1
|
|
|
$
|
9.8
|
|
|
$
|
57.1
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for
income taxes
|
|
|
0.9
|
|
|
|
0.2
|
|
|
|
3.6
|
|
Interest
expense
|
|
|
1.2
|
|
|
|
1.9
|
|
|
|
1.2
|
|
Earnings Before Interest and Taxes
(EBIT) (1)
|
|
$
|
39.2
|
|
|
$
|
11.9
|
|
|
$
|
61.9
|
|
EBIT Margin
(1)
|
|
|
11.1
|
%
|
|
|
4.3
|
%
|
|
|
18.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
14.6
|
|
|
|
17.6
|
|
|
|
15.0
|
|
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) (2)
|
|
$
|
53.8
|
|
|
$
|
29.5
|
|
|
$
|
76.9
|
|
EBITDA Margin
(2)
|
|
|
15.3
|
%
|
|
|
10.8
|
%
|
|
|
22.7
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Gain on sale of TMS
assets
|
|
|
—
|
|
|
|
—
|
|
|
|
0.1
|
|
Restructuring
charges
|
|
|
(0.4)
|
|
|
|
(0.5)
|
|
|
|
(4.7)
|
|
Accelerated
depreciation and amortization (EBIT only)
|
|
|
—
|
|
|
|
(1.5)
|
|
|
|
—
|
|
Gain (loss) from
remeasurement of benefit plans
|
|
|
6.5
|
|
|
|
(0.2)
|
|
|
|
22.3
|
|
Loss on extinguishment
of debt
|
|
|
(17.0)
|
|
|
|
—
|
|
|
|
—
|
|
Write-down of supplies
inventory
|
|
|
—
|
|
|
|
(2.1)
|
|
|
|
—
|
|
Business transformation
costs (5)
|
|
|
(0.5)
|
|
|
|
(0.3)
|
|
|
|
(0.6)
|
|
TMS impairment
charges
|
|
|
—
|
|
|
|
(0.3)
|
|
|
|
—
|
|
Customer program early
termination
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.4)
|
|
Loss on sale or
disposal of assets (6)
|
|
|
(0.1)
|
|
|
|
—
|
|
|
|
(0.9)
|
|
Harrison melt
impairment charges
|
|
|
—
|
|
|
|
(7.9)
|
|
|
|
—
|
|
Adjusted EBIT (3)
|
|
$
|
50.7
|
|
|
$
|
24.7
|
|
|
$
|
47.1
|
|
Adjusted EBIT Margin
(3)
|
|
|
14.4
|
%
|
|
|
9.0
|
%
|
|
|
13.9
|
%
|
Adjusted EBITDA (4)
|
|
$
|
65.3
|
|
|
$
|
40.8
|
|
|
$
|
62.1
|
|
Adjusted EBITDA Margin
(4)
|
|
|
18.6
|
%
|
|
|
14.9
|
%
|
|
|
18.4
|
%
|
|
|
(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, adjustments listed in the
table above. Adjusted EBIT Margin is Adjusted EBIT as a percentage
of net sales.
|
|
|
(4)
|
Adjusted EBITDA is
defined as EBITDA excluding, as applicable, adjustments listed in
the table above. Adjusted EBITDA Margin is Adjusted EBITDA as a
percentage of net sales.
|
|
|
(5)
|
Business transformation
costs consist of items that are non-routine in nature. These costs
were primarily related to professional service fees associated with
organizational changes.
|
|
|
(6)
|
For the three months
ended March 31, 2022, loss on sale or disposal of assets consisted
of write-offs of aged assets. For the three months ended December
31, 2021, loss on sale or disposal of assets consisted of losses
incurred related to older excess assets sold via an auction
process.
|
Reconciliation of Base Sales by end market sector to GAAP Net
Sales by end-market sector:
The tables below present base sales by end-market sector, which
represents a financial measure that has not been determined in
accordance with U.S. GAAP. Base Sales by end-market sector are
defined as net sales by end-market sector excluding raw material
and natural gas surcharges. Base Sales by end-market sector are an
important financial measure used in the management of the business.
Management believes presenting base sales by end-market sector is
useful to investors as it provides additional insight into key
drivers of base sales such as base price and product mix.
End-Market Sector Sales Data
|
|
(Dollars in millions, tons in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2022
|
|
|
|
Mobile
|
|
|
Industrial
|
|
|
Energy
|
|
|
Other
|
|
|
Total
|
|
Tons
|
|
|
88.9
|
|
|
|
94.9
|
|
|
|
12.6
|
|
|
|
—
|
|
|
|
196.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
144.1
|
|
|
$
|
175.0
|
|
|
$
|
25.0
|
|
|
$
|
7.9
|
|
|
$
|
352.0
|
|
Less:
Surcharges
|
|
|
45.7
|
|
|
|
54.9
|
|
|
|
8.0
|
|
|
|
—
|
|
|
|
108.6
|
|
Base Sales
|
|
$
|
98.4
|
|
|
$
|
120.1
|
|
|
$
|
17.0
|
|
|
$
|
7.9
|
|
|
$
|
243.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales /
Ton
|
|
$
|
1,621
|
|
|
$
|
1,844
|
|
|
$
|
1,984
|
|
|
$
|
—
|
|
|
$
|
1,792
|
|
Surcharges /
Ton
|
|
$
|
514
|
|
|
$
|
578
|
|
|
$
|
635
|
|
|
$
|
—
|
|
|
$
|
553
|
|
Base Sales /
Ton
|
|
$
|
1,107
|
|
|
$
|
1,266
|
|
|
$
|
1,349
|
|
|
$
|
—
|
|
|
$
|
1,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2021
|
|
|
|
Mobile
|
|
|
Industrial
|
|
|
Energy
|
|
|
Other
|
|
|
Total
|
|
Tons
|
|
|
103.5
|
|
|
|
84.4
|
|
|
|
5.5
|
|
|
|
—
|
|
|
|
193.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
133.6
|
|
|
$
|
124.7
|
|
|
$
|
7.7
|
|
|
$
|
7.6
|
|
|
$
|
273.6
|
|
Less:
Surcharges
|
|
|
32.8
|
|
|
|
32.7
|
|
|
|
2.1
|
|
|
|
—
|
|
|
|
67.6
|
|
Base Sales
|
|
$
|
100.8
|
|
|
$
|
92.0
|
|
|
$
|
5.6
|
|
|
$
|
7.6
|
|
|
$
|
206.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales /
Ton
|
|
$
|
1,291
|
|
|
$
|
1,477
|
|
|
$
|
1,400
|
|
|
$
|
—
|
|
|
$
|
1,415
|
|
Surcharges /
Ton
|
|
$
|
317
|
|
|
$
|
387
|
|
|
$
|
382
|
|
|
$
|
—
|
|
|
$
|
350
|
|
Base Sales /
Ton
|
|
$
|
974
|
|
|
$
|
1,090
|
|
|
$
|
1,018
|
|
|
$
|
—
|
|
|
$
|
1,065
|
|
Calculation of Total Liquidity(1):
This calculation is provided as additional relevant information
about the company's financial position.
(Dollars in millions)
(Unaudited)
|
|
March 31,
2022
|
|
|
December 31,
2021
|
|
Cash and cash
equivalents
|
|
$
|
239.9
|
|
|
$
|
259.6
|
|
|
|
|
|
|
|
|
Credit Agreement:
|
|
|
|
|
|
|
Maximum
availability
|
|
$
|
400.0
|
|
|
$
|
400.0
|
|
Suppressed
availability(2)
|
|
|
(111.7)
|
|
|
|
(143.5)
|
|
Availability
|
|
|
288.3
|
|
|
|
256.5
|
|
Credit facility amount
borrowed
|
|
|
—
|
|
|
|
—
|
|
Letter of credit
obligations
|
|
|
(5.4)
|
|
|
|
(5.4)
|
|
Availability not
borrowed
|
|
$
|
282.9
|
|
|
$
|
251.1
|
|
|
|
|
|
|
|
|
Total
liquidity
|
|
$
|
522.8
|
|
|
$
|
510.7
|
|
|
|
(1)
|
Total Liquidity is
defined as available borrowing capacity plus cash and cash
equivalents.
|
|
|
(2)
|
As of March 31, 2022
and December 31, 2021, TimkenSteel had less than $400 million in
collateral assets to borrow against.
|
ADJUSTED EBITDA(1)
WALKS
|
|
(Dollars in millions)
(Unaudited)
|
|
2021 1Q
vs. 2022 1Q
|
|
|
2021 4Q
vs. 2022 1Q
|
|
Beginning Adjusted
EBITDA(1)
|
|
$
|
41
|
|
|
$
|
62
|
|
Volume
|
|
|
2
|
|
|
|
1
|
|
Price/Mix
|
|
|
36
|
|
|
|
16
|
|
Raw Material
Spread
|
|
|
(9)
|
|
|
|
(17)
|
|
Manufacturing
|
|
|
(3)
|
|
|
|
5
|
|
Inventory
Reserve
|
|
|
(2)
|
|
|
|
—
|
|
SG&A
|
|
|
1
|
|
|
|
(2)
|
|
Other
|
|
|
(1)
|
|
|
|
—
|
|
Ending Adjusted
EBITDA(1)
|
|
$
|
65
|
|
|
$
|
65
|
|
|
|
(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).
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/timkensteel-announces-first-quarter-2022-results-301539963.html
SOURCE TimkenSteel Corp.