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Share Name | Share Symbol | Market | Type |
---|---|---|---|
TimkenSteel Corporation | NYSE:TMST | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 20.40 | 0 | 01:00:00 |
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FORM 10-Q
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TIMKENSTEEL CORPORATION
(Exact name of registrant as specified in its charter)
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Ohio
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46-4024951
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1835 Dueber Avenue SW, Canton, OH
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44706
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
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o
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(Do not check if smaller reporting company)
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Smaller reporting company
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o
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Class
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Outstanding at October 15, 2016
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Common Shares, without par value
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44,221,682
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PAGE
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
|
2016
|
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2015
|
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2016
|
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2015
|
||||||||
(Dollars in millions, except per share data)
|
|
|
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||||||||
Net sales
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$213.8
|
|
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$232.7
|
|
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$654.8
|
|
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$899.6
|
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Cost of products sold
|
211.3
|
|
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253.2
|
|
|
638.7
|
|
|
884.6
|
|
||||
Gross Profit (Loss)
|
2.5
|
|
|
(20.5
|
)
|
|
16.1
|
|
|
15.0
|
|
||||
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|
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||||||||
Selling, general and administrative expenses
|
25.0
|
|
|
26.6
|
|
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71.6
|
|
|
85.4
|
|
||||
Impairment and restructuring charges
|
—
|
|
|
0.8
|
|
|
0.3
|
|
|
2.8
|
|
||||
Operating Loss
|
(22.5
|
)
|
|
(47.9
|
)
|
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(55.8
|
)
|
|
(73.2
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
3.9
|
|
|
0.9
|
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8.0
|
|
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2.0
|
|
||||
Other expense, net
|
0.2
|
|
|
1.0
|
|
|
1.7
|
|
|
2.4
|
|
||||
Loss Before Income Taxes
|
(26.6
|
)
|
|
(49.8
|
)
|
|
(65.5
|
)
|
|
(77.6
|
)
|
||||
Benefit for income taxes
|
(10.0
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)
|
|
(19.0
|
)
|
|
(24.8
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)
|
|
(29.4
|
)
|
||||
Net Loss
|
|
($16.6
|
)
|
|
|
($30.8
|
)
|
|
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($40.7
|
)
|
|
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($48.2
|
)
|
|
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||||||||
Per Share Data:
|
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|
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|
|
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|
||||||||
Basic loss per share
|
($0.38
|
)
|
|
($0.69
|
)
|
|
($0.92
|
)
|
|
($1.08
|
)
|
||||
Diluted loss per share
|
($0.38
|
)
|
|
($0.69
|
)
|
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($0.92
|
)
|
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($1.08
|
)
|
||||
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|
||||||||
Dividends per share
|
|
$—
|
|
|
|
$0.14
|
|
|
|
$—
|
|
|
|
$0.42
|
|
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Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
($16.6
|
)
|
|
|
($30.8
|
)
|
|
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($40.7
|
)
|
|
|
($48.2
|
)
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(0.5
|
)
|
|
(1.1
|
)
|
|
(2.8
|
)
|
|
(1.1
|
)
|
||||
Pension and postretirement liability adjustments
|
(8.5
|
)
|
|
6.1
|
|
|
0.8
|
|
|
17.2
|
|
||||
Other comprehensive (loss) income, net of tax
|
(9.0
|
)
|
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5.0
|
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(2.0
|
)
|
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16.1
|
|
||||
Comprehensive Loss, net of tax
|
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($25.6
|
)
|
|
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($25.8
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)
|
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($42.7
|
)
|
|
|
($32.1
|
)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
(Dollars in millions)
|
|
|
|
||||
ASSETS
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|
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||||
Current Assets
|
|
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|
||||
Cash and cash equivalents
|
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$23.3
|
|
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$42.4
|
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Accounts receivable, net of allowances
|
103.8
|
|
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80.9
|
|
||
2016 - $1.8 million; 2015 - $1.5 million
|
|
|
|
||||
Inventories, net
|
155.4
|
|
|
173.9
|
|
||
Deferred charges and prepaid expenses
|
3.8
|
|
|
11.4
|
|
||
Other current assets
|
6.7
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|
|
9.2
|
|
||
Total Current Assets
|
293.0
|
|
|
317.8
|
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||
|
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|
||||
Property, Plant and Equipment, Net
|
743.5
|
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|
769.3
|
|
||
|
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|
||||
Other Assets
|
|
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|
||||
Pension assets
|
11.0
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20.0
|
|
||
Intangible assets, net
|
25.7
|
|
|
30.6
|
|
||
Other non-current assets
|
4.9
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|
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4.1
|
|
||
Total Other Assets
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41.6
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54.7
|
|
||
Total Assets
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$1,078.1
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$1,141.8
|
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|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
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|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable, trade
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|
$73.1
|
|
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|
$49.5
|
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Salaries, wages and benefits
|
18.2
|
|
|
21.4
|
|
||
Accrued pension and postretirement costs
|
3.2
|
|
|
3.2
|
|
||
Other current liabilities
|
21.4
|
|
|
30.1
|
|
||
Total Current Liabilities
|
115.9
|
|
|
104.2
|
|
||
|
|
|
|
||||
Non-Current Liabilities
|
|
|
|
||||
Convertible notes, net
|
65.6
|
|
|
—
|
|
||
Other long-term debt
|
70.2
|
|
|
200.2
|
|
||
Accrued pension and postretirement costs
|
143.8
|
|
|
114.1
|
|
||
Deferred income taxes
|
10.1
|
|
|
26.9
|
|
||
Other non-current liabilities
|
12.7
|
|
|
10.0
|
|
||
Total Non-Current Liabilities
|
302.4
|
|
|
351.2
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Shareholders’ Equity
|
|
|
|
||||
Preferred shares, without par value; authorized 10.0 million shares, none issued
|
—
|
|
|
—
|
|
||
Common shares, without par value; authorized 200.0 million shares;
issued 2016 and 2015 - 45.7 million shares
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,073.1
|
|
|
1,058.2
|
|
||
Retained deficit
|
(102.4
|
)
|
|
(61.7
|
)
|
||
Treasury shares - 2016 and 2015 - 1.5 million, respectively
|
(45.1
|
)
|
|
(46.3
|
)
|
||
Accumulated other comprehensive loss
|
(265.8
|
)
|
|
(263.8
|
)
|
||
Total Shareholders’ Equity
|
659.8
|
|
|
686.4
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$1,078.1
|
|
|
|
$1,141.8
|
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
(Dollars in millions)
|
|
|
|
||||
CASH PROVIDED (USED)
|
|
|
|
||||
Operating Activities
|
|
|
|
||||
Net loss
|
|
($40.7
|
)
|
|
|
($48.2
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
56.2
|
|
|
54.6
|
|
||
Amortization related to convertible notes
|
1.1
|
|
|
—
|
|
||
Amortization related to other long-term debt
|
0.8
|
|
|
0.3
|
|
||
Impairment charges
|
—
|
|
|
0.9
|
|
||
Loss on sale or disposal of assets
|
1.0
|
|
|
1.0
|
|
||
Deferred income taxes
|
(24.9
|
)
|
|
(30.2
|
)
|
||
Stock-based compensation expense
|
4.6
|
|
|
6.0
|
|
||
Pension and postretirement expense
|
21.2
|
|
|
22.9
|
|
||
Loss on pension settlement
|
5.4
|
|
|
—
|
|
||
Pension and postretirement contributions and payments
|
(3.1
|
)
|
|
(12.2
|
)
|
||
Reimbursement from postretirement plan assets
|
13.3
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(23.0
|
)
|
|
60.4
|
|
||
Inventories, net
|
18.5
|
|
|
97.8
|
|
||
Accounts payable, trade
|
23.6
|
|
|
(71.3
|
)
|
||
Other accrued expenses
|
(8.4
|
)
|
|
(33.8
|
)
|
||
Deferred charges and prepaid expenses
|
7.6
|
|
|
17.7
|
|
||
Other, net
|
2.3
|
|
|
(2.1
|
)
|
||
Net Cash Provided by Operating Activities
|
55.5
|
|
|
63.8
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(26.1
|
)
|
|
(52.9
|
)
|
||
Proceeds from disposals of property, plant and equipment
|
—
|
|
|
0.4
|
|
||
Net Cash Used by Investing Activities
|
(26.1
|
)
|
|
(52.5
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
||||
Cash dividends paid to shareholders
|
—
|
|
|
(18.7
|
)
|
||
Purchase of treasury shares
|
—
|
|
|
(17.3
|
)
|
||
Proceeds from exercise of stock options
|
—
|
|
|
1.5
|
|
||
Credit agreement repayments
|
(130.0
|
)
|
|
(45.0
|
)
|
||
Credit agreement borrowings
|
—
|
|
|
65.0
|
|
||
Issuance costs related to credit agreement
|
(1.7
|
)
|
|
—
|
|
||
Proceeds from issuance of convertible notes
|
86.3
|
|
|
—
|
|
||
Issuance costs related to convertible notes
|
(3.1
|
)
|
|
—
|
|
||
Net transfers to Timken and affiliates
|
—
|
|
|
(0.5
|
)
|
||
Net Cash Used by Financing Activities
|
(48.5
|
)
|
|
(15.0
|
)
|
||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
||
Decrease In Cash and Cash Equivalents
|
(19.1
|
)
|
|
(3.7
|
)
|
||
Cash and cash equivalents at beginning of period
|
42.4
|
|
|
34.5
|
|
||
Cash and Cash Equivalents at End of Period
|
|
$23.3
|
|
|
|
$30.8
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Inventories, net:
|
|
|
|
||||
Manufacturing supplies
|
|
$38.5
|
|
|
|
$43.3
|
|
Raw materials
|
13.5
|
|
|
14.6
|
|
||
Work in process
|
60.5
|
|
|
59.5
|
|
||
Finished products
|
51.7
|
|
|
64.9
|
|
||
Subtotal
|
164.2
|
|
|
182.3
|
|
||
Allowance for surplus and obsolete inventory
|
(8.8
|
)
|
|
(8.4
|
)
|
||
Total Inventories, net
|
|
$155.4
|
|
|
|
$173.9
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Property, Plant and Equipment, net:
|
|
|
|
||||
Land
|
|
$13.4
|
|
|
|
$13.4
|
|
Buildings and improvements
|
418.2
|
|
|
418.2
|
|
||
Machinery and equipment
|
1,332.3
|
|
|
1,298.2
|
|
||
Construction in progress
|
63.0
|
|
|
74.9
|
|
||
Subtotal
|
1,826.9
|
|
|
1,804.7
|
|
||
Less allowances for depreciation
|
(1,083.4
|
)
|
|
(1,035.4
|
)
|
||
Property, Plant and Equipment, net
|
|
$743.5
|
|
|
|
$769.3
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Intangible Assets Subject to Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$6.8
|
|
|
$4.0
|
|
|
|
$2.8
|
|
|
|
$6.8
|
|
|
|
$3.7
|
|
|
|
$3.1
|
|
||
Technology use
|
9.0
|
|
|
5.2
|
|
|
3.8
|
|
|
9.0
|
|
|
4.7
|
|
|
4.3
|
|
||||||
Capitalized software
|
58.2
|
|
|
39.1
|
|
|
19.1
|
|
|
57.9
|
|
|
34.7
|
|
|
23.2
|
|
||||||
Total Intangible Assets
|
|
$74.0
|
|
|
|
$48.3
|
|
|
|
$25.7
|
|
|
|
$73.7
|
|
|
|
$43.1
|
|
|
|
$30.6
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Principal
|
|
$86.3
|
|
|
|
$—
|
|
Less: Debt issuance costs, net of amortization
|
(2.2
|
)
|
|
—
|
|
||
Less: Debt discount, net of amortization
|
(18.5
|
)
|
|
—
|
|
||
Convertible notes, net
|
|
$65.6
|
|
|
|
$—
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
2016
|
|
2015
|
||||||||
Contractual interest expense
|
|
$1.3
|
|
|
|
$—
|
|
|
$1.7
|
|
|
|
$—
|
|
Amortization of debt issuance costs
|
0.1
|
|
|
—
|
|
0.2
|
|
|
—
|
|
||||
Amortization of debt discount
|
0.7
|
|
|
—
|
|
0.9
|
|
|
—
|
|
||||
Total
|
|
$2.1
|
|
|
|
$—
|
|
|
$2.8
|
|
|
|
$—
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.84% as of September 30, 2016)
|
|
$12.2
|
|
|
|
$12.2
|
|
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.83% as of September 30, 2016)
|
9.5
|
|
|
9.5
|
|
||
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.84% as of September 30, 2016)
|
8.5
|
|
|
8.5
|
|
||
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
|
40.0
|
|
|
170.0
|
|
||
Total Other Long-Term Debt
|
|
$70.2
|
|
|
|
$200.2
|
|
|
Foreign Currency Translation Adjustments
|
|
Pension and Postretirement Liability Adjustments
|
|
Total
|
||||||
Balance at December 31, 2015
|
|
($6.3
|
)
|
|
|
($257.5
|
)
|
|
|
($263.8
|
)
|
Other comprehensive (loss) income before reclassifications, before income tax
|
(2.8
|
)
|
|
(19.5
|
)
|
|
(22.3
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss, before income tax
|
—
|
|
|
20.2
|
|
|
20.2
|
|
|||
Income tax benefit
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||
Net current period other comprehensive (loss) income, net of income taxes
|
(2.8
|
)
|
|
0.8
|
|
|
(2.0
|
)
|
|||
Balance at September 30, 2016
|
|
($9.1
|
)
|
|
|
($256.7
|
)
|
|
|
($265.8
|
)
|
|
Foreign Currency Translation Adjustments
|
|
Pension and Postretirement Liability Adjustments
|
|
Total
|
||||||
Balance at December 31, 2014
|
|
($4.8
|
)
|
|
|
($292.5
|
)
|
|
|
($297.3
|
)
|
Other comprehensive (loss) income before reclassifications, before income tax
|
(1.1
|
)
|
|
0.5
|
|
|
(0.6
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss, before income tax
|
—
|
|
|
26.7
|
|
|
26.7
|
|
|||
Income tax expense
|
—
|
|
|
(10.0
|
)
|
|
(10.0
|
)
|
|||
Net current period other comprehensive (loss) income, net of income tax
|
(1.1
|
)
|
|
17.2
|
|
|
16.1
|
|
|||
Balance at September 30, 2015
|
|
($5.9
|
)
|
|
|
($275.3
|
)
|
|
|
($281.2
|
)
|
|
Total
|
|
Additional Paid-in Capital
|
|
Retained Deficit
|
|
Treasury Shares
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at December 31, 2015
|
|
$686.4
|
|
|
|
$1,058.2
|
|
|
|
($61.7
|
)
|
|
|
($46.3
|
)
|
|
|
($263.8
|
)
|
Net loss
|
(40.7
|
)
|
|
—
|
|
|
(40.7
|
)
|
|
—
|
|
|
—
|
|
|||||
Pension and postretirement adjustment, net of tax
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|||||
Foreign currency translation adjustments
|
(2.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.8
|
)
|
|||||
Stock-based compensation expense
|
4.6
|
|
|
4.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of treasury shares
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|||||
Equity component of convertible notes, net
|
18.7
|
|
|
18.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Deferred tax liability on convertible notes
|
(7.2
|
)
|
|
(7.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance at September 30, 2016
|
|
$659.8
|
|
|
|
$1,073.1
|
|
|
|
($102.4
|
)
|
|
|
($45.1
|
)
|
|
|
($265.8
|
)
|
|
Three Months Ended September 30, 2016
|
|
Three Months Ended September 30, 2015
|
||||||||||||
Components of net periodic benefit cost:
|
Pension
|
|
Postretirement
|
|
Pension
|
|
Postretirement
|
||||||||
Service cost
|
|
$3.9
|
|
|
|
$0.4
|
|
|
|
$4.3
|
|
|
|
$0.4
|
|
Interest cost
|
13.2
|
|
|
2.4
|
|
|
12.8
|
|
|
2.3
|
|
||||
Expected return on plan assets
|
(18.1
|
)
|
|
(1.5
|
)
|
|
(19.4
|
)
|
|
(1.7
|
)
|
||||
Amortization of prior service cost
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
|
0.3
|
|
||||
Amortization of net actuarial loss
|
6.3
|
|
|
—
|
|
|
8.7
|
|
|
—
|
|
||||
Settlement loss
|
5.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net Periodic Benefit Cost
|
|
$10.8
|
|
|
|
$1.5
|
|
|
|
$6.5
|
|
|
|
$1.3
|
|
|
Nine Months Ended September 30, 2016
|
|
Nine Months Ended September 30, 2015
|
||||||||||||
Components of net periodic benefit cost:
|
Pension
|
|
|
Postretirement
|
|
|
Pension
|
|
Postretirement
|
||||||
Service cost
|
11.7
|
|
|
1.2
|
|
|
|
$12.6
|
|
|
|
$1.3
|
|
||
Interest cost
|
39.8
|
|
|
7.1
|
|
|
38.5
|
|
|
7.0
|
|
||||
Expected return on plan assets
|
(54.3
|
)
|
|
(4.5
|
)
|
|
(58.1
|
)
|
|
(5.1
|
)
|
||||
Amortization of prior service cost
|
0.4
|
|
|
0.8
|
|
|
0.4
|
|
|
0.8
|
|
||||
Amortization of net actuarial loss
|
19.0
|
|
|
—
|
|
|
25.5
|
|
|
—
|
|
||||
Settlement loss
|
5.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net Periodic Benefit Cost
|
|
$22.0
|
|
|
|
$4.6
|
|
|
|
$18.9
|
|
|
|
$4.0
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss for basic and diluted earnings per share
|
|
($16.6
|
)
|
|
|
($30.8
|
)
|
|
|
($40.7
|
)
|
|
|
($48.2
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding, basic
|
44,221,310
|
|
|
44,431,092
|
|
|
44,215,373
|
|
|
44,636,149
|
|
||||
Dilutive effect of stock-based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average shares outstanding, diluted
|
44,221,310
|
|
|
44,431,092
|
|
|
44,215,373
|
|
|
44,636,149
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic loss per share
|
|
($0.38
|
)
|
|
|
($0.69
|
)
|
|
|
($0.92
|
)
|
|
|
($1.08
|
)
|
Diluted loss per share
|
|
($0.38
|
)
|
|
|
($0.69
|
)
|
|
|
($0.92
|
)
|
|
|
($1.08
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Benefit for income taxes
|
|
($10.0
|
)
|
|
|
($19.0
|
)
|
|
|
($24.8
|
)
|
|
|
($29.4
|
)
|
Effective tax rate
|
37.6
|
%
|
|
38.2
|
%
|
|
37.9
|
%
|
|
37.9
|
%
|
|
2016
|
2015
|
||||
Beginning Balance, January 1
|
|
$1.3
|
|
|
$1.3
|
|
Expenses, net
|
—
|
|
—
|
|
||
Payments
|
(0.4
|
)
|
(0.3
|
)
|
||
Ending Balance, September 30
|
|
$0.9
|
|
|
$1.0
|
|
Balance at December 31, 2015
|
|
$2.3
|
|
Expenses
|
0.3
|
|
|
Payments
|
(2.4
|
)
|
|
Balance at September 30, 2016
|
|
$0.2
|
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2016
|
|
2015
|
|
Increase (Decrease)
|
|
% Change
|
|||||||
Net sales
|
|
$213.8
|
|
|
|
$232.7
|
|
|
|
($18.9
|
)
|
|
(8.1)%
|
|
Net sales, excluding surcharges
|
184.9
|
|
|
201.7
|
|
|
(16.8
|
)
|
|
(8.3)%
|
|
|||
Gross profit (loss)
|
2.5
|
|
|
(20.5
|
)
|
|
23.0
|
|
|
112.2%
|
|
|||
Gross margin
|
1.2
|
%
|
|
(8.8
|
)%
|
|
NM
|
|
|
1,000 bps
|
|
|||
Selling, general and administrative expenses
|
25.0
|
|
|
26.6
|
|
|
(1.6
|
)
|
|
(6.0)%
|
|
|||
Net loss
|
(16.6
|
)
|
|
(30.8
|
)
|
|
(14.2
|
)
|
|
(46.1)%
|
|
|||
Average scrap index per ton (30 day lag)
|
272
|
|
|
265
|
|
|
7.0
|
|
|
2.6%
|
|
|||
Average selling price per ton, including surcharges
|
|
$1,202
|
|
|
|
$1,302
|
|
|
|
($100
|
)
|
|
(7.7)%
|
|
Shipments (in tons)
|
177,823
|
|
|
178,747
|
|
|
(924
|
)
|
|
(0.5)%
|
|
|||
Melt utilization
|
44
|
%
|
|
40
|
%
|
|
NM
|
|
|
NM
|
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2016
|
|
2015
|
|
Increase (Decrease)
|
|
% Change
|
|||||||
Net sales
|
|
$654.8
|
|
|
|
$899.6
|
|
|
|
($244.8
|
)
|
|
(27.2)%
|
|
Net sales, excluding surcharges
|
587.2
|
|
|
755.1
|
|
|
(167.9
|
)
|
|
(22.2)%
|
|
|||
Gross profit
|
16.1
|
|
|
15.0
|
|
|
1.1
|
|
|
7.3%
|
|
|||
Gross margin
|
2.5
|
%
|
|
1.7
|
%
|
|
NM
|
|
|
80 bps
|
|
|||
Selling, general and administrative expenses
|
71.6
|
|
|
85.4
|
|
|
(13.8
|
)
|
|
(16.2)%
|
|
|||
Net loss
|
(40.7
|
)
|
|
(48.2
|
)
|
|
(7.5
|
)
|
|
(15.6)%
|
|
|||
Average scrap index per ton (30 day lag)
|
229
|
|
|
283
|
|
|
(54.0
|
)
|
|
(19.1)%
|
|
|||
Average selling price per ton, including surcharges
|
|
$1,183
|
|
|
|
$1,359
|
|
|
|
($176
|
)
|
|
(13.0)%
|
|
Shipments (in tons)
|
553,646
|
|
|
661,785
|
|
|
(108,139
|
)
|
|
(16.3)%
|
|
|||
Melt utilization
|
45
|
%
|
|
51
|
%
|
|
NM
|
|
|
NM
|
|
|
Three Months Ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
$ Change
|
||||||
Cash interest paid
|
|
$1.1
|
|
|
|
$0.9
|
|
|
|
$0.2
|
|
Accrued interest on convertible notes
|
1.3
|
|
|
—
|
|
|
1.3
|
|
|||
Amortization of convertible notes discount and deferred financing
|
1.5
|
|
|
—
|
|
|
1.5
|
|
|||
Total Interest Expense
|
|
$3.9
|
|
|
|
$0.9
|
|
|
|
$3.0
|
|
|
Nine Months Ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
$ Change
|
||||||
Cash interest paid
|
|
$4.9
|
|
|
|
$2.0
|
|
|
|
$2.9
|
|
Accrued interest on convertible notes
|
1.7
|
|
|
—
|
|
|
1.7
|
|
|||
Amortization of convertible notes discount and deferred financing
|
1.4
|
|
|
—
|
|
|
1.4
|
|
|||
Total Interest Expense
|
|
$8.0
|
|
|
|
$2.0
|
|
|
|
$6.0
|
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Benefit for income taxes
|
|
($10.0
|
)
|
|
|
($19.0
|
)
|
|
|
($9.0
|
)
|
|
(47.4)%
|
|
Effective tax rate
|
37.6
|
%
|
|
38.2
|
%
|
|
NM
|
|
|
(60) bps
|
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Benefit for income taxes
|
|
($24.8
|
)
|
|
|
($29.4
|
)
|
|
|
($4.6
|
)
|
|
(15.6)%
|
|
Effective tax rate
|
37.9
|
%
|
|
37.9
|
%
|
|
NM
|
|
|
0 bps
|
|
Current Assets
|
September 30,
2016 |
|
December 31,
2015 |
||||
Cash and cash equivalents
|
|
$23.3
|
|
|
|
$42.4
|
|
Accounts receivable, net
|
103.8
|
|
|
80.9
|
|
||
Inventories, net
|
155.4
|
|
|
173.9
|
|
||
Deferred charges and prepaid expenses
|
3.8
|
|
|
11.4
|
|
||
Other current assets
|
6.7
|
|
|
9.2
|
|
||
Total Current Assets
|
|
$293.0
|
|
|
|
$317.8
|
|
Property, Plant and Equipment
|
September 30,
2016 |
|
December 31,
2015 |
||||
Property, plant and equipment, net
|
|
$743.5
|
|
|
|
$769.3
|
|
Other Assets
|
September 30,
2016 |
|
December 31,
2015 |
||||
Pension assets
|
|
$11.0
|
|
|
|
$20.0
|
|
Intangible assets, net
|
25.7
|
|
|
30.6
|
|
||
Other non-current assets
|
4.9
|
|
|
4.1
|
|
||
Total Other Assets
|
|
$41.6
|
|
|
|
$54.7
|
|
Liabilities and Shareholders’ Equity
|
September 30,
2016 |
|
December 31,
2015 |
||||
Current liabilities
|
|
$115.9
|
|
|
|
$104.2
|
|
Convertible notes, net
|
65.6
|
|
|
—
|
|
||
Other long-term debt
|
70.2
|
|
|
200.2
|
|
||
Accrued pension and postretirement costs - long-term
|
143.8
|
|
|
114.1
|
|
||
Deferred income taxes
|
10.1
|
|
|
26.9
|
|
||
Other non-current liabilities
|
12.7
|
|
|
10.0
|
|
||
Total shareholders’ equity
|
659.8
|
|
|
686.4
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$1,078.1
|
|
|
|
$1,141.8
|
|
|
September 30, 2016
|
June 30, 2016
|
March 31, 2016
|
||||||
Cash and cash equivalents
|
|
$23.3
|
|
|
$37.2
|
|
|
$37.5
|
|
|
|
|
|
||||||
Amended Credit Agreement:
|
|
|
|
||||||
Maximum availability
|
|
$204.1
|
|
|
$203.7
|
|
|
$205.9
|
|
Amount borrowed
|
40.0
|
|
50.0
|
|
155.0
|
|
|||
Letter of credit obligations
|
1.6
|
|
1.6
|
|
0.7
|
|
|||
Availability not borrowed
|
162.5
|
|
152.1
|
|
50.2
|
|
|||
Availability block
|
33.1
|
|
33.1
|
|
33.1
|
|
|||
Net availability
|
|
$129.4
|
|
|
$119.0
|
|
|
$17.1
|
|
|
|
|
|
||||||
Total liquidity
|
|
$152.7
|
|
|
$156.2
|
|
|
$54.6
|
|
Cash Flows
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Net cash provided by operating activities
|
|
$55.5
|
|
|
|
$63.8
|
|
Net cash used by investing activities
|
(26.1
|
)
|
|
(52.5
|
)
|
||
Net cash used by financing activities
|
(48.5
|
)
|
|
(15.0
|
)
|
||
Decrease in Cash and Cash Equivalents
|
|
($19.1
|
)
|
|
|
($3.7
|
)
|
Contractual Obligations
|
Total
|
|
Less than
1 Year |
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years |
||||||||||
Convertible notes and other long-term debt
|
|
$156.5
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$126.3
|
|
|
|
$30.2
|
|
Interest payments
|
33.8
|
|
|
7.3
|
|
|
14.5
|
|
|
10.4
|
|
|
1.6
|
|
|||||
Operating leases
|
9.7
|
|
|
5.1
|
|
|
4.2
|
|
|
0.4
|
|
|
—
|
|
|||||
Purchase commitments
|
48.1
|
|
|
39.4
|
|
|
8.7
|
|
|
—
|
|
|
—
|
|
|||||
Retirement benefits
|
19.8
|
|
|
5.0
|
|
|
9.7
|
|
|
1.4
|
|
|
3.7
|
|
|||||
Total
|
|
$267.9
|
|
|
|
$56.8
|
|
|
|
$37.1
|
|
|
|
$138.5
|
|
|
|
$35.5
|
|
•
|
deterioration in world economic conditions, or in economic conditions in any of the geographic regions in which we conduct business, including additional adverse effects from global economic slowdown, terrorism or hostilities. This includes: political risks associated with the potential instability of governments and legal systems in countries in which we or our 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 we operate. This includes: our ability 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 continue in the 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 our products are sold or distributed;
|
•
|
changes in operating costs, including the effect of changes in our manufacturing processes; changes in costs associated with varying levels of operations and manufacturing capacity; availability of raw materials and energy; our ability to mitigate the impact of fluctuations in raw materials and energy costs and the effectiveness of our 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 our 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 our ability to maintain appropriate relations with unions that represent our 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, environmental issues and taxes, among other matters;
|
•
|
the availability of financing and interest rates, which affect: our cost of funds and/or ability to raise capital; our pension obligations and investment performance; and/or customer demand and the ability of customers to obtain financing to purchase our products or equipment that contain our products; and
|
•
|
those items identified under “Risk Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2015
.
|
(a)
|
Disclosure Controls and Procedures
|
(b)
|
Changes in Internal Control Over Financial Reporting
|
Period
|
Total number
of shares purchased (1) |
Average
price paid per share |
Total number of shares purchased as part of publicly announced plans or programs
|
Maximum number of shares that may yet be purchased under the plans or programs
(2)
|
|||||
July 1 - 31, 2016
|
—
|
|
|
$—
|
|
—
|
|
1,459,907
|
|
August 1 - 31, 2016
|
—
|
|
|
$—
|
|
—
|
|
1,459,907
|
|
September 1 - 30, 2016
|
—
|
|
|
$—
|
|
—
|
|
1,459,907
|
|
Total
|
—
|
|
|
$—
|
|
—
|
|
1,459,907
|
|
(1)
|
All shares not included in the number of shares purchased as part of publicly announced plans or programs were surrendered or deemed surrendered to the Company in connection with the Company’s stock-based compensation plans.
|
(2)
|
On August 6, 2014, the Company announced that its Board of Directors approved a share repurchase plan pursuant to which the Company may repurchase up to 3 million of its common shares in the aggregate. This share repurchase plan expires on December 31, 2016. The Company may repurchase such shares from time to time in open market purchases or privately negotiated transactions. The Company may make all or part of these repurchases pursuant to accelerated share repurchases or Rule 10b5-1 plans. The Company’s Amended Credit Agreement places certain limitations on its ability to repurchase its outstanding common shares.
|
Exhibit Number
|
|
Exhibit Description
|
12.1*
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
31.1*
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1**
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
|
|
TIMKENSTEEL CORPORATION
|
|
|
|
|
|
|
Date:
|
October 27, 2016
|
/s/ Christopher J. Holding
|
|
|
Christopher J. Holding
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Exhibit Number
|
|
Exhibit Description
|
12.1
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
31.1
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
1 Year TimkenSteel Chart |
1 Month TimkenSteel Chart |
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