Quarterly Report (10-q)
03 November 2022 - 09:29PM
Edgar (US Regulatory)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 1-36313
TIMKENSTEEL CORPORATION
(Exact name of registrant as specified in its charter)
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Ohio |
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46-4024951 |
(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 |
(Address of principal executive offices) |
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(Zip Code) |
330.471.7000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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Title of each class |
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Trading symbol |
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Name of exchange in which registered |
Common shares |
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TMST |
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New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☐ |
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Accelerated filer |
☒ |
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Non-accelerated filer |
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☐ |
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Smaller reporting company |
☐ |
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Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial reporting accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class |
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Outstanding at October 31, 2022 |
Common Shares, without par value |
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44,469,394 |
Table of Contents
TimkenSteel Corporation
Table of Contents
2
Table of Contents
Part I. Financial Information
Item 1. Financial Statements
TimkenSteel Corporation
Consolidated Statements of Operations (Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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(Dollars in millions, except per share data) |
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Net sales |
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$ |
316.8 |
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$ |
343.7 |
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$ |
1,084.5 |
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$ |
944.6 |
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Cost of products sold |
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311.2 |
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277.0 |
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937.5 |
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780.0 |
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Gross Profit |
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5.6 |
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66.7 |
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147.0 |
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164.6 |
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Selling, general and administrative expenses |
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16.2 |
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19.9 |
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56.4 |
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60.4 |
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Restructuring charges |
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— |
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0.4 |
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0.8 |
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2.0 |
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Loss on sale of consolidated subsidiary |
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— |
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1.1 |
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— |
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1.1 |
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Loss (gain) on sale or disposal of assets, net |
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1.9 |
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0.1 |
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2.5 |
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0.5 |
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Impairment charges |
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— |
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— |
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— |
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8.2 |
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Interest (income) expense, net |
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(0.2 |
) |
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1.2 |
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1.6 |
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4.7 |
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Loss on extinguishment of debt |
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0.1 |
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— |
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43.1 |
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— |
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Other (income) expense, net |
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0.2 |
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(6.6 |
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(58.8 |
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(28.3 |
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Income (Loss) Before Income Taxes |
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(12.6 |
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50.6 |
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101.4 |
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116.0 |
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Provision (benefit) for income taxes |
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0.7 |
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0.5 |
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3.1 |
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2.1 |
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Net Income (Loss) |
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$ |
(13.3 |
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$ |
50.1 |
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$ |
98.3 |
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$ |
113.9 |
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Per Share Data: |
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Basic earnings (loss) per share |
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$ |
(0.29 |
) |
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$ |
1.08 |
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$ |
2.12 |
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$ |
2.49 |
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Diluted earnings (loss) per share |
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$ |
(0.29 |
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$ |
0.94 |
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$ |
1.91 |
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$ |
2.12 |
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See accompanying Notes to the unaudited Consolidated Financial Statements.
3
Table of Contents
TimkenSteel Corporation
Consolidated Statement of Comprehensive Income (Loss) (Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(Dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(13.3 |
) |
|
$ |
50.1 |
|
|
$ |
98.3 |
|
|
$ |
113.9 |
|
Other comprehensive income (loss), net of tax of $0.2 million for the three months ended September 30, 2022 and $0.6 million for the nine months ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
(2.3 |
) |
|
|
(0.1 |
) |
|
|
(5.4 |
) |
|
|
0.3 |
|
Pension and postretirement liability adjustments |
|
|
(0.8 |
) |
|
|
(1.4 |
) |
|
|
(2.7 |
) |
|
|
(4.3 |
) |
Other comprehensive income (loss), net of tax |
|
|
(3.1 |
) |
|
|
(1.5 |
) |
|
|
(8.1 |
) |
|
|
(4.0 |
) |
Comprehensive Income (Loss), net of tax |
|
$ |
(16.4 |
) |
|
$ |
48.6 |
|
|
$ |
90.2 |
|
|
$ |
109.9 |
|
See accompanying Notes to the unaudited Consolidated Financial Statements.
4
Table of Contents
TimkenSteel Corporation
Consolidated Balance Sheets (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30,
2022 |
|
|
December 31,
2021 |
|
(Dollars in millions) |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
262.5 |
|
|
$ |
259.6 |
|
Accounts receivable, net of allowances (2022 - $1.5 million; 2021 - $1.9 million) |
|
|
100.1 |
|
|
|
100.5 |
|
Inventories, net |
|
|
205.6 |
|
|
|
210.9 |
|
Deferred charges and prepaid expenses |
|
|
6.9 |
|
|
|
3.9 |
|
Assets held for sale |
|
|
— |
|
|
|
4.3 |
|
Other current assets |
|
|
7.4 |
|
|
|
3.1 |
|
Total Current Assets |
|
|
582.5 |
|
|
|
582.3 |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
485.1 |
|
|
|
510.2 |
|
Operating lease right-of-use assets |
|
|
14.0 |
|
|
|
14.5 |
|
Pension assets |
|
|
32.8 |
|
|
|
43.1 |
|
Intangible assets, net |
|
|
5.4 |
|
|
|
6.7 |
|
Other non-current assets |
|
|
2.5 |
|
|
|
2.1 |
|
Total Assets |
|
$ |
1,122.3 |
|
|
$ |
1,158.9 |
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
123.8 |
|
|
$ |
141.9 |
|
Salaries, wages and benefits |
|
|
22.6 |
|
|
|
37.9 |
|
Accrued pension and postretirement costs |
|
|
2.6 |
|
|
|
4.3 |
|
Current operating lease liabilities |
|
|
6.2 |
|
|
|
5.7 |
|
Current convertible notes, net |
|
|
20.4 |
|
|
|
44.9 |
|
Other current liabilities |
|
|
16.3 |
|
|
|
16.1 |
|
Total Current Liabilities |
|
|
191.9 |
|
|
|
250.8 |
|
|
|
|
|
|
|
|
Credit Agreement |
|
|
— |
|
|
|
— |
|
Non-current operating lease liabilities |
|
|
7.8 |
|
|
|
8.8 |
|
Accrued pension and postretirement costs |
|
|
172.9 |
|
|
|
223.0 |
|
Deferred income taxes |
|
|
1.7 |
|
|
|
2.2 |
|
Other non-current liabilities |
|
|
12.9 |
|
|
|
9.5 |
|
Total Liabilities |
|
|
387.2 |
|
|
|
494.3 |
|
|
|
|
|
|
|
|
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 2022 - 47.1 million shares and 2021 - 46.3 million shares |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
846.0 |
|
|
|
832.1 |
|
Retained deficit |
|
|
(89.9 |
) |
|
|
(188.2 |
) |
Treasury shares - 2022 - 1.9 million; 2021 - None |
|
|
(33.6 |
) |
|
|
— |
|
Accumulated other comprehensive income (loss) |
|
|
12.6 |
|
|
|
20.7 |
|
Total Shareholders’ Equity |
|
|
735.1 |
|
|
|
664.6 |
|
Total Liabilities and Shareholders’ Equity |
|
$ |
1,122.3 |
|
|
$ |
1,158.9 |
|
See accompanying Notes to the unaudited Consolidated Financial Statements.
5
Table of Contents
TimkenSteel Corporation
Consolidated Statements of Shareholders’ Equity (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions) |
|
Common
Shares
Outstanding |
|
|
Additional
Paid-in
Capital |
|
|
Retained
Deficit |
|
|
Treasury
Shares |
|
|
Accumulated
Other
Comprehensive
Income (Loss) |
|
|
Total |
|
Balance at December 31, 2021 |
|
|
46,268,855 |
|
|
$ |
832.1 |
|
|
$ |
(188.2 |
) |
|
$ |
— |
|
|
$ |
20.7 |
|
|
$ |
664.6 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
37.1 |
|
|
|
— |
|
|
|
— |
|
|
|
37.1 |
|
Other comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.9 |
) |
|
|
(1.9 |
) |
Stock-based compensation expense |
|
|
298,648 |
|
|
|
2.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.1 |
|
Stock option activity |
|
|
406,750 |
|
|
|
6.3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6.3 |
|
Purchase of treasury shares |
|
|
(169,816 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3.4 |
) |
|
|
— |
|
|
|
(3.4 |
) |
Shares surrendered for taxes |
|
|
(91,853 |
) |
|
|
(0.2 |
) |
|
|
— |
|
|
|
(1.4 |
) |
|
|
— |
|
|
|
(1.6 |
) |
Balance at March 31, 2022 |
|
|
46,712,584 |
|
|
$ |
840.3 |
|
|
$ |
(151.1 |
) |
|
$ |
(4.8 |
) |
|
$ |
18.8 |
|
|
$ |
703.2 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
74.5 |
|
|
|
— |
|
|
|
— |
|
|
|
74.5 |
|
Other comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3.1 |
) |
|
|
(3.1 |
) |
Stock-based compensation expense |
|
|
44,157 |
|
|
|
2.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
Stock option activity |
|
|
92,290 |
|
|
|
1.5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.5 |
|
Purchase of treasury shares |
|
|
(437,638 |
) |
|
|
— |
|
|
|
— |
|
|
|
(9.3 |
) |
|
|
— |
|
|
|
(9.3 |
) |
Issuance of treasury shares |
|
|
2,285 |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
Shares surrendered for taxes |
|
|
(2,285 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.1 |
) |
Balance at June 30, 2022 |
|
|
46,411,393 |
|
|
$ |
843.9 |
|
|
$ |
(76.6 |
) |
|
$ |
(14.1 |
) |
|
$ |
15.7 |
|
|
$ |
768.9 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
(13.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
(13.3 |
) |
Other comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3.1 |
) |
|
|
(3.1 |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
2.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
Stock option activity |
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
Purchase of treasury shares |
|
|
(1,252,112 |
) |
|
|
— |
|
|
|
— |
|
|
|
(19.7 |
) |
|
|
— |
|
|
|
(19.7 |
) |
Issuance of treasury shares |
|
|
10,724 |
|
|
|
(0.2 |
) |
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
|
|
— |
|
Shares surrendered for taxes |
|
|
(348 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance at September 30, 2022 |
|
|
45,169,657 |
|
|
$ |
846.0 |
|
|
$ |
(89.9 |
) |
|
$ |
(33.6 |
) |
|
$ |
12.6 |
|
|
$ |
735.1 |
|
6
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares
Outstanding |
|
|
Additional
Paid-in
Capital |
|
|
Retained
Deficit |
|
|
Treasury
Shares |
|
|
Accumulated
Other
Comprehensive
Income (Loss) |
|
|
Total |
|
Balance at December 31, 2020 |
|
|
45,164,308 |
|
|
$ |
843.4 |
|
|
$ |
(363.4 |
) |
|
$ |
(12.9 |
) |
|
$ |
40.4 |
|
|
$ |
507.5 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
9.8 |
|
|
|
— |
|
|
|
— |
|
|
|
9.8 |
|
Other comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.4 |
) |
|
|
(1.4 |
) |
Adoption of new accounting standard |
|
|
— |
|
|
|
(10.6 |
) |
|
|
4.2 |
|
|
|
— |
|
|
|
— |
|
|
|
(6.4 |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
1.8 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.8 |
|
Stock option activity |
|
|
— |
|
|
|
2.5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.5 |
|
Issuance of treasury shares |
|
|
580,248 |
|
|
|
(12.4 |
) |
|
|
— |
|
|
|
12.4 |
|
|
|
— |
|
|
|
— |
|
Shares surrendered for taxes |
|
|
(72,174 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.5 |
) |
|
|
— |
|
|
|
(0.5 |
) |
Balance at March 31, 2021 |
|
|
45,672,382 |
|
|
$ |
824.7 |
|
|
$ |
(349.4 |
) |
|
$ |
(1.0 |
) |
|
$ |
39.0 |
|
|
$ |
513.3 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
54.0 |
|
|
|
— |
|
|
|
— |
|
|
|
54.0 |
|
Other comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.1 |
) |
|
|
(1.1 |
) |
Stock-based compensation expense |
|
|
178,886 |
|
|
|
1.8 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.8 |
|
Stock option activity |
|
|
66,615 |
|
|
|
0.7 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
Issuance of treasury shares |
|
|
57,845 |
|
|
|
(1.0 |
) |
|
|
— |
|
|
|
1.0 |
|
|
|
— |
|
|
|
— |
|
Convertible notes settlement |
|
|
113,226 |
|
|
|
1.3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.3 |
|
Balance at June 30, 2021 |
|
|
46,088,954 |
|
|
$ |
827.5 |
|
|
$ |
(295.4 |
) |
|
$ |
— |
|
|
$ |
37.9 |
|
|
$ |
570.0 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|