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
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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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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
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Common shares
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TMST
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New York Stock Exchange
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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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☒
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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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
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Common Shares, without par value
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44,469,394
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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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$
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316.8
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$
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343.7
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$
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1,084.5
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$
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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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)
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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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)
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(58.8
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)
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(28.3
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)
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Income (Loss) Before Income Taxes
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(12.6
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)
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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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$
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(13.3
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)
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$
|
50.1
|
|
|
$
|
98.3
|
|
|
$
|
113.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
(0.29
|
)
|
|
$
|
1.08
|
|
|
$
|
2.12
|
|
|
$
|
2.49
|
|
|
Diluted earnings (loss) per share
|
|
$
|
(0.29
|
)
|
|
$
|
0.94
|
|
|
$
|
1.91
|
|
|
$
|
2.12
|
|
See accompanying Notes to the unaudited Consolidated Financial
Statements.
3
Table of Contents
TimkenSteel Corporation
Consolidated Statement of Comprehensive
Income (Loss) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
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)
|
|
|
—
|
|
|
|
—
|
|
|
|
50.1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50.1
|
|
|
Other comprehensive income (loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.5
|
)
|
|
|
(1.5
|
)
|
|
Stock-based compensation expense
|
|
|
93,350
|
|
|
|
1.9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.9
|
|
|
Stock option activity
|
|
|
25,940
|
|
|
|
0.1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.1
|
|
|
Balance at September 30, 2021
|
|
|
46,208,244
|
|
|
$
|
829.5
|
|
|
$
|
(245.3
|
)
|
|
$
|
—
|
|
|
$
|
36.4
|
|
|
$
|
620.6
|
|
See accompanying Notes to the unaudited Consolidated Financial
Statements.
7
Table of Contents
TimkenSteel Corporation
Consolidated Statements of
Cash Flows (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
CASH PROVIDED (USED)
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
98.3
|
|
|
$
|
113.9
|
|
|
Adjustments to reconcile net income (loss) to net cash provided
(used) by operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
43.7
|
|
|
|
48.1
|
|
|
Amortization of deferred financing fees
|
|
|
0.6
|
|
|
|
0.7
|
|
|
Loss on extinguishment of debt
|
|
|
43.1
|
|
|
|
—
|
|
|
Loss on sale of consolidated subsidiary
|
|
|
—
|
|
|
|
1.1
|
|
|
Loss (gain) on sale or disposal of assets, net
|
|
|
2.5
|
|
|
|
0.5
|
|
|
Impairment charges
|
|
|
—
|
|
|
|
8.2
|
|
|
Deferred income taxes
|
|
|
(0.5
|
)
|
|
|
(0.1
|
)
|
|
Stock-based compensation expense
|
|
|
6.5
|
|
|
|
5.5
|
|
|
Pension and postretirement (benefit) expense, net
|
|
|
(44.7
|
)
|
|
|
(11.7
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
0.5
|
|
|
|
(66.9
|
)
|
|
Inventories, net
|
|
|
5.4
|
|
|
|
(45.1
|
)
|
|
Accounts payable
|
|
|
(19.9
|
)
|
|
|
44.3
|
|
|
Other accrued expenses
|
|
|
(12.5
|
)
|
|
|
10.3
|
|
|
Pension and postretirement contributions and payments
|
|
|
(4.9
|
)
|
|
|
(2.9
|
)
|
|
Deferred charges and prepaid expenses
|
|
|
(3.1
|
)
|
|
|
(1.1
|
)
|
|
Other, net
|
|
|
(4.2
|
)
|
|
|
1.4
|
|
|
Net Cash Provided (Used) by Operating Activities
|
|
|
110.8
|
|
|
|
106.2
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(15.7
|
)
|
|
|
(7.3
|
)
|
|
Proceeds from sale of consolidated subsidiary, net
|
|
|
—
|
|
|
|
6.2
|
|
|
Proceeds from disposals of property, plant and equipment
|
|
|
3.0
|
|
|
|
0.2
|
|
|
Net Cash Provided (Used) by Investing Activities
|
|
|
(12.7
|
)
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
Purchase of treasury shares
|
|
|
(32.4
|
)
|
|
|
—
|
|
|
Proceeds from exercise of stock options
|
|
|
7.9
|
|
|
|
3.3
|
|
|
Shares surrendered for employee taxes on stock
compensation
|
|
|
(1.7
|
)
|
|
|
(0.5
|
)
|
|
Repayments on convertible notes
|
|
|
(67.6
|
)
|
|
|
|