UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

~~FORM 10-Q~~



ý	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

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, ~~2017~~

2023



o	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission file number: 1-36313

TIMKENSTEEL CORPORATION

(Exact name of registrant as specified in its charter)

~~TIMKENSTEEL CORPORATION~~

~~(Exact name of registrant as specified in its charter)~~



Ohio		46-4024951
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1835 Dueber Avenue SW, Canton, OH		44706
(Address of principal executive offices)		(Zip Code)

~~330.471.7000~~

330.471.7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading symbol	Name of exchange in which registered
Common shares	TMST	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. Yesý ☒ No¨

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yesý ☒ 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~~

Act.



Large accelerated filer	o ☒		Accelerated filer	ý ☐

Non-accelerated filer	o ☐	~~(Do not check if smaller reporting company)~~	Smaller reporting company	o ☐

			Emerging growth company	o ☐

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¨☐Noý

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



	~~Class~~		~~Outstanding at October 13, 2017~~
	~~Common Shares, without par value~~		~~44,441,647~~

~~TimkenSteel Corporation~~

~~Table of Contents~~



Class		~~PAGE~~ Outstanding at October 31, 2023
Common Shares, without par value		43,154,816

Table of Contents

TimkenSteel Corporation

Table of Contents

~~PART~~

Part I. ~~FINANCIAL INFORMATION~~

~~ITEM I. FINANCIAL STATEMENTS~~

Financial Information

Item 1. Financial Statements

TimkenSteel Corporation

Consolidated Statements of Operations (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars in millions, except per share data)
Net sales
$339.1

$213.8

$987.8

$654.8
Cost of products sold 320.6
206.3
928.5
629.6
Gross Profit 18.5
7.5
59.3
25.2

Selling, general and administrative expenses 22.5
21.8
67.7
66.8
Restructuring charges —
—
—
0.3
Operating Loss (4.0 ) (14.3 ) (8.4 ) (41.9 )

Interest expense 3.7
3.9
11.0
8.0
Other income (expense), net 1.9
(17.3 ) 10.7
(12.1 )
Loss Before Income Taxes (5.8 ) (35.5 ) (8.7 ) (62.0 )
Provision (benefit) for income taxes 0.1
(13.3 ) 1.2
(23.5 )
Net Loss
($5.9 )
($22.2 )
($9.9 )
($38.5 )

Per Share Data:
Basic loss per share
($0.13 )
($0.50 )
($0.22 )
($0.87 )
Diluted loss per share
($0.13 )
($0.50 )
($0.22 )
($0.87 )

Dividends per share
$—

$—

$—

$—


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
(Dollars in millions, except per share data)
Net sales	$	354.2		$	316.8		$	1,034.3		$	1,084.5
Cost of products sold		303.2			311.2			889.2			937.5
Gross Profit		51.0			5.6			145.1			147.0

Selling, general and administrative expenses		20.5			16.2			61.9			56.4
Restructuring charges		—			—			—			0.8
Loss (gain) on sale or disposal of assets, net		(0.3	)		1.9			(2.8	)		2.5
Interest (income) expense, net		(1.8	)		(0.2	)		(5.0	)		1.6
Loss on extinguishment of debt		—			0.1			11.4			43.1
Other (income) expense, net		(2.0	)		0.2			(13.1	)		(58.8	)
Income (Loss) Before Income Taxes		34.6			(12.6	)		92.7			101.4
Provision (benefit) for income taxes		9.8			0.7			24.6			3.1
Net Income (Loss)	$	24.8		$	(13.3	)	$	68.1		$	98.3

Per Share Data:
Basic earnings (loss) per share	$	0.56		$	(0.29	)	$	1.55		$	2.12
Diluted earnings (loss) per share	$	0.51		$	(0.29	)	$	1.43		$	1.91

See accompanying Notes to ~~Unaudited~~the unaudited Consolidated Financial Statements.

Table of Contents

TimkenSteel Corporation

Consolidated ~~Statements~~Statement of Comprehensive ~~Loss~~Income (Loss) (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars in millions)
Net Loss
($5.9 )
($22.2 )
($9.9 )
($38.5 )
Other comprehensive income, net of tax:
Foreign currency translation adjustments 0.3
(0.5 ) 1.1
(2.8 )
Pension and postretirement liability adjustments 0.1
—
0.4
0.8
Other comprehensive income, net of tax 0.4
(0.5 ) 1.5
(2.0 )
Comprehensive Loss, net of tax
($5.5 )
($22.7 )
($8.4 )
($40.5 )


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
(Dollars in millions)
Net income (loss)	$	24.8		$	(13.3	)	$	68.1		$	98.3
Other comprehensive income (loss), net of benefit (provision) for income taxes of $0.2 million and $0.2 million for the three months ended September 30, 2023 and 2022, and $0 million and $0.6 million for the nine months ended September 30, 2023 and 2022
Foreign currency translation adjustments		(0.7	)		(2.3	)		(0.5	)		(5.4	)
Pension and postretirement liability adjustments		(1.1	)		(0.8	)		(2.5	)		(2.7	)
Other comprehensive income (loss), net of tax		(1.8	)		(3.1	)		(3.0	)		(8.1	)
Comprehensive Income (Loss), net of tax	$	23.0		$	(16.4	)	$	65.1		$	90.2

See accompanying Notes to ~~Unaudited~~the unaudited Consolidated Financial Statements.

Table of Contents

TimkenSteel Corporation

Consolidated Balance Sheets (Unaudited)

September 30,
2017 December 31,
2016
(Dollars in millions)
ASSETS
Current Assets
Cash and cash equivalents
$25.8

$25.6
Accounts receivable, net of allowances (2017 - $2.6 million; 2016 - $2.1 million) 160.6
91.6
Inventories, net 219.5
164.2
Deferred charges and prepaid expenses 4.2
2.8
Other current assets 7.4
6.2
Total Current Assets 417.5
290.4

Property, Plant and Equipment, Net 701.6
741.9

Other Assets
Pension assets 9.8
6.2
Intangible assets, net 20.9
25.0
Other non-current assets 6.0
6.4
Total Other Assets 36.7
37.6
Total Assets
$1,155.8

$1,069.9

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable, trade
$133.8

$87.0
Salaries, wages and benefits 30.4
20.3
Accrued pension and postretirement costs 3.0
3.0
Other current liabilities 21.4
20.4
Total Current Liabilities 188.6
130.7

Non-Current Liabilities
Convertible notes, net 69.2
66.4
Other long-term debt 95.2
70.2
Accrued pension and postretirement costs 196.2
192.1
Deferred income taxes 0.7
—
Other non-current liabilities 13.2
13.1
Total Non-Current Liabilities 374.5
341.8

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 2017 and 2016 - 45.7 million shares
—
—
Additional paid-in capital 842.3
845.6
Retained deficit (204.1 ) (193.9 )
Treasury shares - 2017 - 1.3 million; 2016 - 1.5 million (37.6 ) (44.9 )
Accumulated other comprehensive loss (7.9 ) (9.4 )
Total Shareholders’ Equity 592.7
597.4
Total Liabilities and Shareholders’ Equity
$1,155.8

$1,069.9


	September 30, 2023			December 31, 2022
(Dollars in millions)
ASSETS
Current Assets
Cash and cash equivalents	$	225.4		$	257.2
Accounts receivable, net of allowances (2023 - $1.9 million; 2022 - $1.0 million)		135.8			79.4
Inventories, net		255.4			192.4
Deferred charges and prepaid expenses		11.5			6.4
Other current assets		2.4			21.2
Total Current Assets		630.5			556.6

Property, plant and equipment, net		487.6			486.1
Operating lease right-of-use assets		11.2			12.5
Pension assets		19.3			19.4
Intangible assets, net		3.0			5.0
Other non-current assets		2.2			2.4
Total Assets	$	1,153.8		$	1,082.0

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	148.5		$	113.2
Salaries, wages and benefits		20.6			21.2
Accrued pension and postretirement costs		2.0			2.0
Current operating lease liabilities		5.4			6.0
Current convertible notes, net		13.1			20.4
Other current liabilities		17.4			23.9
Total Current Liabilities		207.0			186.7

Credit Agreement		—			—
Non-current operating lease liabilities		5.9			6.5
Accrued pension and postretirement costs		170.4			162.9
Deferred income taxes		26.6			25.9
Other non-current liabilities		13.6			13.5
Total Liabilities		423.5			395.5

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 2023 - 47.1 million shares and 2022 - 47.1 million shares		—			—
Additional paid-in capital		842.2			847.0
Retained deficit		(55.0	)		(123.1	)
Treasury shares - 2023 - 3.8 million; 2022 - 3.0 million		(68.6	)		(52.1	)
Accumulated other comprehensive income (loss)		11.7			14.7
Total Shareholders’ Equity		730.3			686.5
Total Liabilities and Shareholders’ Equity	$	1,153.8		$	1,082.0

See accompanying Notes to ~~Unaudited~~the unaudited Consolidated Financial Statements.

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 As of December 31, 2022		44,064,891		$	847.0		$	(123.1	)	$	(52.1	)	$	14.7		$	686.5
Net income (loss)		—			—			14.4			—			—			14.4
Other comprehensive income (loss)		—			—			—			—			(0.6	)		(0.6	)
Stock-based compensation expense		—			2.6			—			—			—			2.6
Stock option activity		101,130			1.3			—			—			—			1.3
Purchase of treasury shares, including excise tax		(514,086	)		—			—			(9.4	)		—			(9.4	)
Issuance of treasury shares		555,062			(11.4	)		—			11.4			—			—
Shares surrendered for taxes		(176,720	)		—			—			(3.4	)		—			(3.4	)
Balance As of March 31, 2023		44,030,277		$	839.5		$	(108.7	)	$	(53.5	)	$	14.1		$	691.4
Net income (loss)		—			—			28.9			—			—			28.9
Other comprehensive income (loss)		—			—			—			—			(0.6	)		(0.6	)
Stock-based compensation expense		—			2.9			—			—			—			2.9
Stock option activity		76,030			0.6			—			—			—			0.6
Purchase of treasury shares, including excise tax		(650,271	)		—			—			(11.4	)		—			(11.4	)
Issuance of treasury shares		29,356			(1.8	)		—			1.8			—			—
Balance As of June 30, 2023		43,485,392		$	841.2		$	(79.8	)	$	(63.1	)	$	13.5		$	711.8
Net income (loss)		—			—			24.8			—			—			24.8
Other comprehensive income (loss)		—			—			—			—			(1.8	)		(1.8	)
Stock-based compensation expense		—			3.0			—			—			—			3.0
Stock option activity		61,075			0.5			—			—			—			0.5
Purchase of treasury shares, including excise tax		(352,860	)		(0.3	)		—			(7.7	)		—			(8.0	)
Issuance of treasury shares		56,131			(2.2	)		—			2.2			—			—
Shares surrendered for taxes		(740	)		—			—			—			—			—
Balance As of September 30, 2023		43,248,998		$	842.2		$	(55.0	)	$	(68.6	)	$	11.7		$	730.3

Table of Contents


(Dollars in millions)	Common Shares Outstanding			Additional Paid-in Capital			Retained Deficit			Treasury Shares			Accumulated Other Comprehensive Income (Loss)			Total
Balance As of 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 As of 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 As of 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 As of September 30, 2022		45,169,657		$	846.0		$	(89.9	)	$	(33.6	)	$	12.6		$	735.1

See accompanying Notes to the unaudited Consolidated Financial Statements.

Table of Contents

TimkenSteel Corporation

Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended September 30,
2017 2016
(Dollars in millions)
CASH PROVIDED (USED)
Operating Activities
Net loss
($9.9 )
($38.5 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 56.4
56.2
Amortization of deferred financing fees and debt discount 3.1
1.9
Impairment charges and loss on sale or disposal of assets 0.4
1.0
Deferred income taxes 0.7
(24.9 )
Stock-based compensation expense 4.9
4.6
Pension and postretirement expense 4.6
23.4
Pension and postretirement contributions and payments (2.5 ) (3.1 )
Reimbursement from postretirement plan assets —
13.3
Changes in operating assets and liabilities:
Accounts receivable, net (69.0 ) (23.0 )
Inventories, net (55.3 ) 18.5
Accounts payable, trade 46.8
23.6
Other accrued expenses 10.7
(8.4 )
Deferred charges and prepaid expenses (1.4 ) 7.6
Other, net (1.2 ) 3.3
Net Cash (Used) Provided by Operating Activities (11.7 ) 55.5

Investing Activities
Capital expenditures (11.9 ) (26.1 )
Net Cash Used by Investing Activities (11.9 ) (26.1 )

Financing Activities
Proceeds from exercise of stock options 0.2
—
Shares surrendered for employee taxes on stock compensation (1.4 ) —
Credit agreement repayments (5.0 ) (130.0 )
Credit agreement borrowings 30.0
—
Debt issuance costs —
(4.8 )
Proceeds from issuance of convertible notes —
86.3
Net Cash Provided (Used) by Financing Activities 23.8
(48.5 )
Effect of exchange rate changes on cash —
—
Increase (Decrease) In Cash and Cash Equivalents 0.2
(19.1 )
Cash and cash equivalents at beginning of period 25.6
42.4
Cash and Cash Equivalents at End of Period
$25.8

$23.3


	Nine Months Ended September 30,
	2023			2022
(Dollars in millions)
CASH PROVIDED (USED)
Operating Activities
Net income (loss)	$	68.1		$	98.3
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization		42.8			43.7
Amortization of deferred financing fees		0.4			0.6
Loss on extinguishment of debt		11.4			43.1
Loss (gain) on sale or disposal of assets, net		(2.8	)		2.5
Deferred income taxes		0.7			(0.5	)
Stock-based compensation expense		8.5			6.5
Pension and postretirement (benefit) expense, net		6.4			(44.7	)
Changes in operating assets and liabilities:
Accounts receivable, net		(56.1	)		0.5
Inventories, net		(62.7	)		5.4
Accounts payable		34.1			(19.9	)
Other accrued expenses		(9.7	)		(12.5	)
Pension and postretirement contributions and payments		(2.4	)		(4.9	)
Deferred charges and prepaid expenses		(5.0	)		(3.1	)
Other, net		17.5			(4.2	)
Net Cash Provided (Used) by Operating Activities		51.2			110.8

Investing Activities
Capital expenditures		(36.2	)		(15.7	)
Proceeds from disposals of property, plant and equipment		1.7			3.0
Net Cash Provided (Used) by Investing Activities		(34.5	)		(12.7	)

Financing Activities
Purchase of treasury shares		(28.5	)		(32.4	)
Proceeds from exercise of stock options		2.4			7.9
Shares surrendered for employee taxes on stock compensation		(3.4	)		(1.7	)
Repayments on convertible notes		(18.7	)		(67.6	)
Debt issuance costs		—			(0.7	)
Net Cash Provided (Used) by Financing Activities		(48.2	)		(94.5	)
Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash		(31.5	)		3.6
Cash, cash equivalents, and restricted cash at beginning of period		257.8			259.6
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	226.3		$	263.2

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	$	225.4		$	262.5
Restricted cash reported in other current assets		0.9			0.7
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows	$	226.3		$	263.2

See accompanying Notes to ~~Unaudited~~the unaudited Consolidated Financial Statements.

Table of Contents

TimkenSteel Corporation

Notes to Unaudited Consolidated Financial Statements

(dollars in millions, except per share data)

Note1- ~~Company and~~ Basis of Presentation

The accompanying ~~Unaudited~~unaudited Consolidated Financial Statements have been prepared by TimkenSteel Corporation (the “Company” or “TimkenSteel”) in accordance with generally accepted accounting principles in the United States ~~(U.S. GAAP)~~(“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to TimkenSteel’s ~~Audited~~audited Consolidated Financial Statements and Notes included in its Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

~~TimkenSteel Corporation (the~~

Note2-Recent Accounting Pronouncements

Adoption of New Accounting Standards

The Company or TimkenSteel) manufactures alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately 2 million tons and shipment capacity of 1.5 million tons. TimkenSteel’s portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing (tubes) and value-add solutions, such as precision steel components. In addition, TimkenSteel supplies machining and thermal treatment services, as well as manages raw material recycling programs, which are used as a feeder system for the Company’s melt operations. The Company’s products and services are used in a diverse range of demanding applicationsdid not adopt any Accounting Standard Updates (“ASU”) in the ~~following market sectors: oil~~third quarter of 2023. Additionally, there are no current ASUs issued, but not adopted, that are expected to have an impact on the Company.

Legislation related to the COVID-19 Pandemic

Due to a provision in the Coronavirus Aid, Relief, and ~~gas; oil country tubular goods (OCTG); automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation.~~

~~The SBQ bars and tubes production processes take place at the Company’s Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars and seamless mechanical tubes~~Economic Security (“CARES”) Act, the Company ~~produces and includes three manufacturing facilities:~~was able to defer the Faircrest, Harrison, and Gambrinus facilities. TimkenSteel’s value-add solutions production processes take place at three downstream manufacturing facilities: TimkenSteel Material Services (Houston, TX), Tryon Peak (Columbus, NC), and St. Clair (Eaton, OH). Manyemployer share of ~~the production processes are integrated, and the manufacturing facilities produce products that are sold in all of the Company’s market sectors. As~~Social Security payroll taxes for a result, investments in the Company’s facilities and resource allocation decisions affecting the Company’s operations are designed to benefit the overall business of the Company, not any specific aspect of the business.

~~Change in Accounting Principle~~

On December 31, 2016, TimkenSteel changed its accounting principle for recognizing actuarial gains and losses and expected returns on plan assets for its defined benefit pension and other postretirement benefit plans. Prior to 2016, the Company amortized, as a component of pension and other postretirement expense, unrecognized actuarial gains and losses (included within accumulated other comprehensive income (loss)) over the average remaining service period of active employees expected to receive benefits under the plan, or average remaining life expectancy of inactive participants when all or almost all of plan participants are inactive. The Company historically has calculated the market-related value of plan assets based on a 5-year market adjustment. The value was determined by adjusting the fair value of plan assets to reflect the investment gains and lossesspecified time during each of the last 5 years. The difference between the expected return on assets and actual return on assets was recognized at the rate of 20% per year (e.g., recognized over five years). Under the new principle, actuarial gains and losses are immediately recognized through net periodic benefit cost in the Statement of Operations upon the annual remeasurement at December 31, or on an interim basis as triggering events warrant remeasurement. In addition, the Company changed its accounting for measuring the market-related value of plan assets from a calculated amount (based on a five-year smoothing of asset returns) to fair value. The Company believes these changes are preferable, as they result in an accelerated recognition of changes in assumptions and market return on plan assets, as compared to the minimum amortization approach and market-related value of plan assets (i.e. delayed approach). Additionally, the Company believes the new accounting principles provide a better representation of the operating results of the Company and the impact of its benefit obligations (through the income statement) in the period when changes occur.

These changes have been applied retrospectively to prior periods beginning with the formation of the TimkenSteel pension and postretirement benefit plans during the second quarter of 2014. The cumulative effect of the change in accounting principles resulted in a reduction of additional paid in capital of $229.4 million per year as of the date of establishment of the TimkenSteel pension and other postretirement plans. For further information refer to our Annual Report on Form 10-K for2020. During the year ended December 31, ~~2016 filed with~~2020, the ~~SEC.~~

~~Table~~Company deferred $6.4 million in cash payments and recorded reserves for such deferred payroll taxes in salaries, wages and benefits on the Consolidated Balance Sheets, to be paid in two equal installments. The first installment in the amount of ~~Contents~~

~~Note 2 - Recent Accounting Pronouncements~~

~~Adoption~~$3.2 million was paid during the fourth quarter of ~~New Accounting Standards~~

2021. The second installment was paid in the fourth quarter of 2022.

The CARES Act also provided for an employee retention credit (“Employee Retention Credit”), which is a refundable tax credit against certain employment taxes. The Company ~~adopted~~qualified for the ~~following Accounting Standard Updates (ASU)~~tax credit in the second and third quarters of 2020 and accrued a benefit of $2.3 million in the fourth quarter of 2020 related to the Employee Retention Credit in other (income) expense, net on the Consolidated Statements of Operations. The Company filed for this credit in the second quarter of 2021 and received a portion of the proceeds from the Internal Revenue Service ("IRS") in the amount of $0.5 million during the ~~nine months ended September 30, 2017. With~~fourth quarter of 2021. The Company received the ~~exception~~remaining $1.8 million of ASU 2017-07, which is discussed below, the adoption of these standards did not have a material impact on the Unaudited Consolidated Financial Statements or the related Notes to the Unaudited Consolidated Financial Statements.



~~Standard~~

~~2015-11~~	~~Inventory: Simplifying the Measurement of Inventory (Topic 330)~~
~~2016-15~~	~~Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force)~~
~~2016-16~~	~~Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740)~~
~~2017-07~~	~~Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715)~~

Incash proceeds in the first quarter of 2017, the FASB issued and the Company early adopted ASU 2017-07, “Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715).” This ASU requires entities to present non-service cost components of net periodic benefit cost in a caption below operating loss and provides that only service cost is eligible to be capitalized in inventory or construction of an asset. This ASU requires retrospective application of the change in the statement of operations and prospective application for the capitalization of service cost in assets. This ASU permits previously disclosed components of net periodic benefit costs as an estimation basis for applying the retrospective presentation as a practical expedient. Utilizing the practical expedient approach, based on amounts previously disclosed, the Company reclassified non-service components of net periodic benefit cost from cost of products sold and selling, general and administrative expenses, respectively, into other income (expense), net on the Unaudited Consolidated Statements of Operations. See Note 9 - Retirement and Postretirement Plans for additional information.

~~Accounting Standards Issued But Not Yet Adopted~~

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. This ASU eliminates the requirement to consider “down round” features when determining whether certain equity-linked financial instruments or embedded features are indexed to an entity’s own stock. It is effective for annual periods beginning after December 31, 2018. Early adoption is permitted. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In May 2017, the FASB issued ASU 2017-09, Compensation — Stock Compensation (Topic 718), Scope of Modification Accounting. This ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. This ASU shall be applied prospectively to awards modified on or after the adoption date. It is effective for annual periods beginning after December 31, 2017. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. TimkenSteel will apply this ASU for awards modified on or after January 1, 2018, as applicable. TimkenSteel does not expect this ASU to have a material impact on its results of operations or financial condition.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations - Clarifying the Definition of a Business.” This guidance clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. It is effective for annual periods beginning after December 31, 2017. TimkenSteel will apply this ASU to business combinations effective after January 1, 2018, as applicable.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU changes how entities will measure credit losses for most financial assets, including trade and other receivables. This guidance will replace the current incurred loss approach with an expected loss model. It is effective for annual periods beginning after December 31, 2019, and interim periods therein. Early adoption is permitted for annual periods

~~Table of Contents~~2022.

Note3-Revenue Recognition

~~beginning after December 15, 2018 and interim periods therein. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.~~

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize lease liabilities and right-of-use assets on the balance sheet for operating leases, and requires additional quantitative and qualitative disclosures. It is effective for annual reporting periods beginning after December 15, 2018. The Company regularly enters into operating leases. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition and will supersede Topic 605, “Revenue Recognition,” and most industry-specific guidance. Under ASU 2014-09 and the subsequently issued amendments, the core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Additional disclosures will be required about the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. This standard is effective for reporting periods after December 15, 2017. TimkenSteel has substantially completed a review of its customer contracts and has preliminarily determined that its revenue transactions will continue to be recognized at a point in time. Based on the analysis completed to date, the Company’s expectation is that this standard will not materially impact the amount or timing of revenue recognized. The Company is finalizing its review of accounting policies, systems and related internal controls in anticipation of adopting ASU 2014-09 as of January 1, 2018, using the modified retrospective approach.

~~Note 3 - Inventories~~

~~The components of inventories, net as of September 30, 2017 and December 31, 2016 were as follows:~~

September 30,
2017 December 31,
2016
Inventories, net:
Manufacturing supplies
$36.6

$37.9
Raw materials 31.7
16.2
Work in process 96.3
58.6
Finished products 63.5
59.6
Subtotal 228.1
172.3
Allowance for surplus and obsolete inventory (8.6 ) (8.1 )
Total Inventories, net
$219.5

$164.2

Inventories are valued at the lower of cost or market, with approximately 64% valued by the LIFO method, and the remaining inventories, including manufacturing supplies inventory as well as international (outside the United States) inventories, valued by FIFO, average cost or specific identification methods.

An actual valuation of the inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation.

The LIFO reserve as of September 30, 2017 and December 31, 2016 was $53.5 million and $44.6 million, respectively. TimkenSteel projects that its LIFO reserve will increase for the year ending December 31, 2017 due primarily to higher anticipated raw material costs and inventory quantities.

~~Table of Contents~~

~~Note 4 - Property, Plant and Equipment~~

~~The components of property, plant and equipment, net as of September 30, 2017 and December 31, 2016, were as follows:~~

September 30,
2017 December 31,
2016
Property, Plant and Equipment, net:
Land
$13.4

$13.3
Buildings and improvements 418.9
420.6
Machinery and equipment 1,354.1
1,352.0
Construction in progress 51.6
63.9
Subtotal 1,838.0
1,849.8
Less allowances for depreciation (1,136.4 ) (1,107.9 )
Property, Plant and Equipment, net
$701.6

$741.9

Total depreciation expense was $51.3 million and $51.0 million for the nine months ended September 30, 2017 and 2016, respectively. TimkenSteel recorded capitalized interest related to construction projects of $0.5 million in both the nine months ended September 30, 2017 and 2016. During the nine months ended September 30, 2017, TimkenSteel recorded impairment charges of $0.4 million in the caption cost of products sold on the Unaudited Consolidated Statements of Operations, related to the discontinued use of certain assets. There were no impairment charges recorded during the nine months ended September 30, 2016.

~~Note 5 - Intangible Assets~~

~~The components of intangible assets, net as of September 30, 2017 and December 31, 2016 were as follows:~~

September 30, 2017 December 31, 2016
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Intangible Assets Subject to Amortization:
Customer relationships
$6.3

$4.0

$2.3

$6.3

$3.7

$2.6
Technology use 9.0
5.8
3.2
9.0
5.2
3.8
Capitalized software 58.5
43.1
15.4
58.9
40.3
18.6
Total Intangible Assets
$73.8

$52.9

$20.9

$74.2

$49.2

$25.0

Intangible assets subject to amortization are amortized on a straight-line method over their legal or estimated useful lives. Amortization expense for intangible assets for the nine months ended September 30, 2017 and 2016 was $5.1 million and $5.2 million, respectively.

~~Note 6 - Financing Arrangements~~

~~Convertible Notes~~

In May 2016, the Company issued $75.0 million aggregate principal amount of Convertible Senior Notes, and an additional $11.3 million principal amount to cover over-allotments (Convertible Notes). The Indenture for the Convertible Notes dated May 31, 2016, which was filed with the Securities and Exchange Commission as an exhibit to a Form 8-K filed on May 31, 2016, contains a complete description of the terms of the Convertible Notes. The key terms are as follows:

~~Maturity Date: June 1, 2021 unless repurchased or converted earlier~~

~~Interest Rate: 6.0% cash interest per year~~

~~Interest Payments Dates:~~ ~~June 1~~ ~~and~~ ~~December 1~~ ~~of each year, beginning on December 1, 2016~~

~~Initial Conversion Price: Approximately $12.58 per common share of the Company~~

~~Initial Conversion Rate:~~ ~~79.5165~~ c~~ommon shares per $1,000 principal amount of Notes~~

~~Table of Contents~~

The net proceeds to the Company from the offering were $83.2 million, after deducting the initial underwriters’ discount and fees and the offering expenses payable by the Company. The Company used the net proceeds to repay a portion of the amounts outstanding under the Amended Credit Agreement.

~~The components of the Convertible Notes as of September 30, 2017 and December 31, 2016 were as follows:~~

September 30,
2017 December 31,
2016
Principal
$86.3

$86.3
Less: Debt issuance costs, net of amortization (1.8 ) (2.1 )
Less: Debt discount, net of amortization (15.3 ) (17.8 )
Convertible notes, net
$69.2

$66.4

The initial value of the principal amount recorded as a liability at the date of issuance was $66.9 million, using an effective interest rate of 12.0%. The remaining $19.4 million of principal amount was allocated to the conversion feature and recorded as a component of shareholders’ equity at the date of issuance. This amount represents a discount to the debt to be amortized through interest expense using the effective interest method through the maturity of the Convertible Notes.

Transaction costs were allocated to the liability and equity components based on their relative values. Transaction costs attributable to the liability component of $2.4 million are amortized to interest expense over the term of the Convertible Notes, and transaction costs attributable to the equity component of $0.7 million are included in shareholders’ equity.

The following table ~~sets forth total interest expense recognized related to~~provides the ~~Convertible Notes:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Contractual interest expense
$1.3

$1.3

$3.9

$1.7
Amortization of debt issuance costs 0.1
0.1
0.1
0.3
0.2
Amortization of debt discount 0.9
0.7
2.5
0.9
Total
$2.3

$2.1

$6.7

$2.8

~~The fair value~~major sources of the Convertible Notes was approximately $162.8 million as of September 30, 2017. The fair value of the Convertible Notes, which falls within Level 1 of the fair value hierarchy, is based on the last price traded in September 2017 .

Holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding March 1, 2021 only under certain circumstances described in the Convertible Notes Indenture, based on the reported sale price of the Company’s common shares for specified trading days as a percentage of the conversion price of the Convertible Notes, and upon the occurrence of specified corporate events. On or after March 1, 2021 until the business day preceding the maturity date, holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amount, at their option.

Upon conversion, the Company will pay or deliver, as the case may be, cash, common shares or a combination of cash and common shares, at its election. If the Company satisfies its conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and common shares, the amount of cash and number of common shares, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 40-trading day period.

If the Company undergoes a fundamental change, subject to certain conditions, holders may require the Company to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to the repurchase date.

Upon certain events of default occurring and continuing (including failure to pay principal or interest on the Convertible Notes when due and payable), the Trustee or the holders of at least 25% in principal amount may declare 100% of the principal and accrued and unpaid interest, if any, on all the Convertible Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving the Company or a significant subsidiary, 100% of the principal and accrued and unpaid interest on the Convertible Notes will become due and payable immediately.

~~Table of Contents~~

~~Other Long-Term Debt~~

~~The components of other long-term debt as of September 30, 2017 and December 31, 2016 were as follows:~~

September 30,
2017 December 31,
2016
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017)
$12.2

$12.2
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017) 9.5
9.5
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.862% as of September 30, 2017) 8.5
8.5
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread) 65.0
40.0
Total Other Long-Term Debt
$95.2

$70.2

~~Amended Credit Agreement~~

~~On February 26, 2016, the Company, as borrower, and certain domestic subsidiaries, as subsidiary guarantors, entered into Amendment No. 1 to the Amended and Restated Credit Agreement (as amended~~revenue by ~~the Amendment, the Amended Credit Agreement) with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto.~~

The Amended Credit Agreement provides for a $265.0 million asset-based revolving credit facility, including a $13.3 million sublimit for the issuance of commercial and standby letters of credit, and a $26.5 million sublimit for swingline loans. The availability of borrowings is subject to a borrowing base calculation based upon a valuation of the eligible accounts receivable, inventory and machinery and equipment of TimkenSteel and the subsidiary guarantors, each multiplied by an applicable advance rate. The Amended Credit Agreement includes a block on availability equal to the greater of $28.9 million or 12.5% of the aggregate commitments (except that in the event of a mandatory reduction in the commitments, the block on availability will be equal to the greater of $20.0 million or 12.5% of the aggregate commitments), effectively reducing the Company’s borrowing base by the availability block.

The Amended Credit Agreement contains certain customary covenants, including covenants that limit TimkenSteel’s and its subsidiaries’ ability to, among other things, (i) incur or suffer to exist certain liens, (ii) make investments, (iii) incur or guaranty additional indebtedness, (iv) enter into consolidations, mergers, acquisitions and sales of assets, (v) make distributions and other restricted payments, (vi) change the nature of its business, (vii) engage in transactions with affiliates and (viii) enter into restrictive agreements, including agreements that restrict the ability to incur liens or make distributions. Further, the Amended Credit Agreement contains financial covenants that (i) limit the amount of capital expenditures TimkenSteel may make to $45.0 million in fiscal year 2016 and $50.0 million in fiscal years thereafter and (ii) require the Company to maintain a minimum specified fixed charge coverage ratio for the year-to-date periods beginning January 1, 2017 and ending June 30, 2017, July 31, 2017 and August 31, 2017. As of September 30, 2017, we are in compliance with all covenants.

Borrowings under the Amended Credit Agreement bear interest based on the daily balance outstanding at LIBOR (with no rate floor), plus an applicable margin (varying from 3.00% to 3.50%) and an additional 0.75% on the machinery and equipment component or, in certain cases, an alternate base rate (based on certain lending institutions’ Prime Rate or as otherwise specified in the Amended and Restated Credit Agreement, with no rate floor), plus an applicable margin (varying from 2.00% to 2.50%). The Amended Credit Agreement also carries a commitment fee equal to the unused borrowings multiplied by an applicable margin of 0.50%. The applicable margins are calculated quarterly and vary based on TimkenSteel’s average quarterly availability as set forth in the Amended Credit Agreement. The interest rate under the Amended Credit Agreement was 5.2% as of September 30, 2017. The amount available under the Amended Credit Agreement as of September 30, 2017 was $164.3 million net, after reducing for the block on availability of $33.1 million.

~~Revenue Refunding Bonds~~

On June 1, 2014, The Timken Company (Timken) purchased, in lieu of redemption, the State of Ohio Water Development Revenue Refunding Bonds (Water Bonds), State of Ohio Air Quality Development Revenue Refunding Bonds (Air Quality Bonds) and State of Ohio Pollution Control Revenue Refunding Bonds (Pollution Control Bonds) (collectively, Bonds). Pursuant to an Assignment and Assumption Agreement dated June 24, 2014 between Timken and TimkenSteel, Timken assigned all of its right, title and interest in and to the loan agreements and the notes associated with the Bonds to, and these obligations were assumed by, TimkenSteel. Additionally, replacement letters of credit were issued for the Water Bonds and the Pollution Control Bonds. The Bonds were remarketed on June 24, 2014 (Remarketing Date) in connection with the conversion of the interest rate mode for the

~~Table of Contents~~

Bonds to the weekly rate and the delivery of the replacement letters of credit, as applicable. The replacement letters of credit had an initial stated term of one year that, upon request by the Company, and with approval by the issuing bank, can be renewed annually thereafter for subsequent one year terms.

On September 1, 2016, the Water Bonds were remarketed in connection with the delivery of a replacement letter of credit issued by JP Morgan Chase Bank, N.A. The key terms of the Water Bonds did not change as a result of the remarketing.

As of September 30, 2017, the Company has requested and the issuing banks have approved renewal of the Air Quality Bonds and Pollution Control Bonds through June 2018 and the Water Bonds through August 2018. ~~TimkenSteel is responsible for payment of the interest and principal associated with the Bonds subsequent to the Remarketing Date.~~

All of TimkenSteel’s other long-term debt is variable-rate debt. As such, the carrying value of this debt is a reasonable estimate of fair value as interest rates on these borrowings approximate current market rates, which is considered a Level 2 fair value input as defined by Accounting Standard Codification (ASC) 820, Fair Value Measurements. The valuation of Level 2 is based on quoted prices for similar assets and liabilities in active markets that are observable either directly or indirectly.

~~Advanced Quench-and-Temper Facility~~

In the second quarter of 2015, TimkenSteel entered into a lease arrangement with the Stark County Port Authority in connection with the construction of a new advanced quench-and-temper facility in Perry Township, Ohio and the issuance of an Industrial Revenue Bond. The bond is held 100% by TimkenSteel Material Services, LLC (a wholly-owned subsidiary of TimkenSteel) and, accordingly, the obligation under the lease agreement and investment in the Industrial Revenue Bond, as well as the related interest income and expense, are eliminated in the Unaudited Consolidated Financial Statements. As of September 30, 2017, $39.6 million has been spent on the new advanced quench-and-temper facility and is reported in property, plant and equipment, net in the Unaudited Consolidated Balance Sheets. Of this amount, $11.8 million has been financed through the lease arrangement described above.

~~Note 7 - Accumulated Other Comprehensive Loss~~

~~Changes in accumulated other comprehensive loss for the nine months ended September 30, 2017 and 2016 by component are as follows:~~

Foreign Currency Translation Adjustments Pension and Postretirement Liability Adjustments Total
Balance at December 31, 2016
($7.0 )
($2.4 )
($9.4 )
Other comprehensive income before reclassifications, before income tax 1.1
—
1.1
Amounts reclassified from accumulated other comprehensive loss, before income tax —
1.1
1.1
Income tax benefit —
(0.7 ) (0.7 )
Net current period other comprehensive income, net of income taxes 1.1
0.4
1.5
Balance at September 30, 2017
($5.9 )
($2.0 )
($7.9 )

Foreign Currency Translation Adjustments Pension and Postretirement Liability Adjustments Total
Balance at December 31, 2015
($5.0 )
($2.9 )
($7.9 )
Other comprehensive loss before reclassifications, before income tax (2.8 ) —
(2.8 )
Amounts reclassified from accumulated other comprehensive loss, before income tax —
1.2
1.2
Income tax benefit —
(0.4 ) (0.4 )
Net current period other comprehensive (loss) income, net of income taxes (2.8 ) 0.8
(2.0 )
Balance as of September 30, 2016
($7.8 )
($2.1 )
($9.9 )

The amount reclassified from accumulated other comprehensive loss for the pension and postretirement liability adjustment was included in other income (expense), net in the Unaudited Consolidated Statements of Operations. These accumulated other comprehensive loss components are components of net periodic benefit cost. See Note 9 - Retirement and Postretirement Plans for additional information.

~~Table of Contents~~

~~Note 8 - Changes in Shareholders' Equity~~

~~Changes in the components of shareholders’ equity for the nine months ended September 30, 2017 were as follows:~~

Total Additional Paid-in Capital Retained Deficit Treasury Shares Accumulated Other Comprehensive Loss
Balance at December 31, 2016
$597.4

$845.6

($193.9 )
($44.9 )
($9.4 )
Net loss (9.9 ) —
(9.9 ) —
—
Pension and postretirement adjustment, net of tax 0.4
—
—
—
0.4
Foreign currency translation adjustments 1.1
—
—
—
1.1
Stock-based compensation expense 4.9
4.9
—
—
—
Stock option activity 0.2
0.2
—
—
—
Issuance of treasury shares —
(8.4 ) (0.3 ) 8.7
—
Shares surrendered for taxes (1.4 ) —
—
(1.4 ) —
Balance at September 30, 2017
$592.7

$842.3

($204.1 )
($37.6 )
($7.9 )

~~Note 9 - Retirement and Postretirement Plans~~

~~The components of net periodic benefit cost~~end-market sector for the three and nine months ended September 30, ~~2017~~2023 and ~~2016 were as follows:~~

Three Months Ended
September 30, 2017 Three Months Ended
September 30, 2016
Components of net periodic benefit cost: Pension Postretirement Pension Postretirement
Service cost
$4.6

$0.4

$3.9

$0.4
Interest cost 12.3
2.1
13.2
2.4
Expected return on plan assets (17.7 ) (1.3 ) (18.1 ) (1.5 )
Amortization of prior service cost 0.1
0.2
0.1
0.2
Net remeasurement loss 2.3
—
20.4
—
Net Periodic Benefit Cost
$1.6

$1.4

$19.5

$1.5

Nine Months Ended
September 30, 2017 Nine Months Ended
September 30, 2016
Components of net periodic benefit cost: Pension Postretirement Pension Postretirement
Service cost
$13.8

$1.2

$11.7

$1.2
Interest cost 36.8
6.3
39.8
7.1
Expected return on plan assets (52.9 ) (4.0 ) (53.6 ) (4.4 )
Amortization of prior service cost 0.3
0.8
0.4
0.8
Net remeasurement loss 2.3
—
20.4
—
Net Periodic Benefit Cost
$0.3

$4.3

$18.7

$4.7

2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Industrial	$	173.7	$	146.0	$	486.2	$	529.2
Mobile		140.1		130.0		404.8		427.0
Energy		35.6		36.0		127.7		107.3
Other (1)		4.8		4.8		15.6		21.0
Total Net Sales	$	354.2	$	316.8	$	1,034.3	$	1,084.5

(1)“Other” sales by end-market sector relates to the Company’s scrap sales.

Table of Contents

The ~~service cost component is included~~following table provides the major sources of revenue by product type for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Bar	$	240.9	$	206.5	$	712.8	$	738.1
Manufactured components		65.2		60.7		178.4		181.3
Tube		43.3		44.8		127.5		144.1
Other (2)		4.8		4.8		15.6		21.0
Total Net Sales	$	354.2	$	316.8	$	1,034.3	$	1,084.5

(2) “Other” sales by product type relates to the Company’s scrap sales.

Contract liabilities are recognized when the Company has received consideration from a customer to transfer goods at a future point in ~~cost of products sold~~time. Contract liabilities are primarily related to deferred revenue resulting from any cash payments received in advance from customers and ~~selling, general and administrative expenses. The non-service cost components of net periodic benefit costs~~ are included in other ~~income (expense), net~~current liabilities on the Consolidated Balance Sheets. Contract liabilities totaled $0.7 million and $5.1 million as of September 30, 2023 and 2022, respectively.

Note4-Restructuring Charges

The Company did not have any restructuring charges for the three and nine months ended September 30, 2023. Additionally, there were no restructuring charges incurred during the third quarter of 2022. Restructuring charges totaled $0.8 million for the nine months ended September 30, 2022. The charges incurred in 2022, which were related to severance and employee-related benefits, were the result of organizational changes.

TimkenSteel recorded reserves for such restructuring charges as other current liabilities on the Consolidated Balance Sheets. The reserve balance at September 30, 2023 is expected to be substantially used in the ~~Unaudited~~next twelve months.

The following is a summary of the restructuring reserve for the nine months ended September 30, 2023 and 2022:


Balance at December 31, 2022	$	0.5
Expenses		—
Payments		(0.4	)
Balance at September 30, 2023	$	0.1


Balance at December 31, 2021	$	4.7
Expenses		0.8
Payments		(4.7	)
Balance at September 30, 2022	$	0.8

Note 5 - Disposition of Non-Core Assets

TimkenSteel Material Services Facility

During the first quarter of 2020, management completed its previously announced plan to close the Company’s TimkenSteel Material Services (“TMS”) facility in Houston and began selling the assets at the facility.

Land and buildings of $4.3 million associated with TMS were classified as assets held for sale on the Consolidated Balance Sheets as of December 31, 2021. All of these assets were sold during the third quarter of 2022. Net cash proceeds of $2.8 million were received and a loss on sale of assets of $1.5 million was recognized on the Consolidated Statements of ~~Operations.~~ Operations during 2022.

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Small-Diameter Seamless Mechanical Tubing Machinery and Equipment

In the third quarter of 2020, TimkenSteel informed customers that as of December 31, 2020 the Company would discontinue the commercial offering of specific small-diameter seamless mechanical tubing products.

In the fourth quarter of 2022, TimkenSteel entered into an agreement to sell the machinery and equipment used in the manufacturing of these specific products. TimkenSteel received down payments totaling $3.4 million, with $1.7 million received in 2022 and the remaining $1.7 million received in 2023. The ~~Company utilized~~final payment resulted in a gain on disposal of assets of $3.4 million in the ~~practical expedient approach, based on amounts previously disclosed, to reclassify non-service components~~second quarter of ~~net periodic benefit cost from cost~~2023. The gain, which has been recognized in the Consolidated Statement of ~~products sold and selling, general and administrative expenses, into other income (expense),~~Operations, was partially offset by asset write downs throughout 2023.

Note6–Other (Income) Expense, net ~~on the Unaudited Consolidated Statements of Operations.~~

The following table ~~sets forth~~provides the ~~amounts reclassified into~~components of other ~~income (expense),~~(income) expense, net for the three and nine months ended September 30, ~~2016.~~2023 and 2022:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Pension and postretirement non-service benefit (income) loss	$	(1.2	)	$	(3.0	)	$	(3.7	)	$	(19.8	)
Loss (gain) from remeasurement of benefit plans		(1.0	)		4.8			1.7			(37.2	)
Foreign currency exchange (gain) loss		—			—			(0.1	)		(0.1	)
Insurance recoveries		—			(1.5	)		(11.3	)		(1.5	)
Miscellaneous (income) expense		0.2			(0.1	)		0.3			(0.2	)
Total other (income) expense, net	$	(2.0	)	$	0.2		$	(13.1	)	$	(58.8	)

~~Table~~

Three Nine

Months ended
September 30, 2016
Cost of products sold
($13.3 )
($7.7 )
Selling, general and administrative expenses (3.4 ) (2.8 )

($16.7 )
($10.5 )

the interest cost, expected return on plan assets and amortization components of net periodic cost.

The TimkenSteel Corporation Bargaining Unit Pension Plan ("Bargaining Plan"), the TimkenSteel Corporation Retirement Plan ~~(Salaried Plan) has~~(“Salaried Plan”), and the Supplemental Pension Plan of TimkenSteel Corporation ("Supplemental Plan") each have a provision that permits employees to elect to receive their pension benefits in a lump ~~sum.~~sum upon retirement. In the ~~third~~first quarter of ~~2017 and 2016,~~2023, the cumulative cost of all ~~settlements exceeded~~lump sum payments was projected to exceed the sum of the service ~~cost~~costs and interest cost components of net periodic pension cost for the Salaried Plan. ~~The~~As a result, the Company completed a full remeasurement of its pension obligations and plan assets associated with the Salaried Plan asduring each quarter of ~~September 30, 2017 and 2016, which resulted in a non-cash pre-tax loss~~2023.

A gain of $1.0 million from the remeasurement of ~~$2.3 million and $20.4 million, respectively, included in other income (expense), net on~~ the ~~Unaudited Consolidated Statements of Operations.~~

~~Note 10 - Earnings Per Share~~

Basic earnings (loss) per share is computed based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed based upon the weighted average number of common shares outstanding plus the dilutive effect of common share equivalents calculated using the treasury stock or if-converted method. For the convertible notes, the Company utilizes the if-converted method to calculate diluted earnings (loss) per share. Under the if-converted method, the Company adjusts net earnings (loss) to add back interest expense (including amortization of debt discount)Salaried Plan was recognized on the convertible notes and includes the number of shares potentially issuable related to the convertible notes in the weighted average shares outstanding. Treasury stock is excluded from the denominator in calculating both basic and diluted earnings (loss) per share.

Common share equivalents, which include shares issuable for equity-based awards and upon the conversion of outstanding convertible notes, were excluded from the computation of diluted earnings (loss) per share because the effect of their inclusion would have been anti-dilutive.

~~The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted loss per share~~ for the three ~~and~~months ended September 30, 2023. The gain for the three months ended September 30, 2023 was due to a $6.5 million decrease in the liability mainly driven by an increase in the discount rate, partially offset by $5.5 million of investment losses on plan assets. For the nine months ended September 30, ~~2017~~2023, the loss of $1.7 million was primarily related to investment losses on plan assets of $5.6 million and ~~2016:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Numerator:
Net loss for basic and diluted earnings per share
($5.9 )
($22.2 )
($9.9 )
($38.5 )

Denominator:
Weighted average shares outstanding, basic 44,433,094
44,221,310
44,373,264
44,215,373
Dilutive effect of stock-based awards —
—
—
—
Weighted average shares outstanding, diluted 44,433,094
44,221,310
44,373,264
44,215,373

Basic loss per share
($0.13 )
($0.50 )
($0.22 )
($0.87 )
Diluted loss per share
($0.13 )
($0.50 )
($0.22 )
($0.87 )

lump sum basis losses of $1.3 million, partially offset by a decrease in the pension liability of $5.2 million due to an increase in the discount rate.

A net loss of $4.8 million from the remeasurement of these benefit plans was recognized for the three months ended September 30, 2022. This loss was due to $73.6 million of investment losses on plan assets and lump sum basis losses, partially offset by a gain of $68.8 million primarily driven by a decrease in the pension liability due to an increase in discount rate.

A net gain of $37.2 million from the remeasurement of these benefit plans was recognized for the nine months ended September 30, 2022. This gain was driven by a $299.9 million decrease in the pension liability primarily due to an increase in discount rate, partially offset by a loss of $262.7 million driven by investment losses on plan assets and lump sum basis losses.

For more details on the aforementioned remeasurements, refer to “Note 11 - Retirement and Postretirement Plans.”

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~~Note 11~~

this time. For further information related to previous insurance recoveries, refer to "Note 7 - Other (Income) Expense, net" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Note7-Income ~~Taxes~~

Tax Provision

TimkenSteel’s provision ~~(benefit)~~ for income taxes in interim periods is computed by applying the appropriate estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items, including interest on prior-year tax liabilities, are recorded during the periods in which they occur.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Provision (benefit) for incomes taxes	$	9.8		$	0.7		$	24.6		$	3.1
Effective tax rate		28.3	%		(5.6	)%		26.5	%		3.1	%

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Provision (benefit) for income taxes
$0.1

($13.3 )
$1.2

($23.5 )
Effective tax rate (1.5 )% 37.5 % (14.0 )% 37.9 %

Income tax expense for the three months ended September 30, 2023 was calculated using forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate. The effective tax rate for the three and nine months ended September 30, 2023 was 28.3% and 26.5%, respectively, compared to a rate of (5.6)% and 3.1% for the prior year. The change was primarily related to higher federal and state taxes due to the reversal of the Company's full valuation allowance as of December 31, 2022, which offset the prior year utilization of loss carryforwards. Additionally, there are limitations on the tax deductibility of the first quarter of 2023 loss on extinguishment of debt on the Convertible Senior Notes due 2025.

For the nine months ended September 30, ~~2017~~2023, TimkenSteel made $17.0 million in U.S. federal payments, $3.4 million in state and local tax payments, and $1.2 million in foreign tax payments. For the nine months ended September 30, 2022, TimkenSteel made $2.0 million in U.S. federal payments, $2.2 million in state and local tax payments, and $0.2 million in foreign tax payments.

Note 8 - Earnings (Loss) Per Share

Basic earnings (loss) per share is computed based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed based upon the weighted average number of common shares outstanding plus the dilutive effect of common share equivalents calculated using the treasury stock method or if-converted method. For the Convertible Notes, the Company utilizes the if-converted method to calculate diluted earnings (loss) per share. Under the if-converted method, the Company adjusts net earnings to add back interest expense (including amortization of debt issuance costs) recognized on the Convertible Notes and includes the number of shares potentially issuable related to the Convertible Notes in the weighted average shares outstanding. Treasury shares are excluded from the denominator in calculating both basic and diluted earnings (loss) per share.

Equity-based Awards

Common share equivalents for shares issuable for equity-based awards amounted to 3.4 million shares for the three and nine months ended September 30, 2023. For the three and nine months ended September 30, 2023, 0.3 million shares and 0.7 million shares, respectively, were excluded from the computation of diluted earnings (loss) per share, primarily related to options with exercise prices above the average market price of our common shares (i.e., “underwater” options), because the effect of their inclusion would have been anti-dilutive. The difference between the remaining 3.1 million shares and 2.7 million shares assumed issued and the ~~year~~1.0 million shares and 0.7 million shares assumed purchased with potential proceeds for the three and nine months ended ~~December 31, 2016, operating losses generated~~September 30, 2023, respectively, were included in the ~~U.S. resulted in a decrease~~denominator of the diluted earnings (loss) per share calculation.

Common share equivalents for shares issuable for equity-based awards amounted to 3.9 million shares and 4.1 million shares for the three and nine months ended September 30, 2022, respectively. For the three months ended September 30, 2022, common share equivalents for shares issuable for equity-based awards were excluded from the computation of diluted earnings (loss) per share, because the effect of their inclusion would have been anti-dilutive.

For the nine months ended September 30, 2022, 1.1 million shares were excluded from the computation of diluted earnings (loss) per share, primarily related to options with exercise prices above the average market price of our common shares (i.e., “underwater” options), because the effect of their inclusion would have been anti-dilutive. The difference between the remaining 3.0 million shares assumed issued and the 0.9 million shares assumed purchased with potential proceeds were included in the ~~carrying value~~denominator of the ~~Company’s U.S. net deferred tax liability to~~diluted earnings (loss) per share calculation.

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Convertible Notes

Common share equivalents for shares issuable upon the ~~point that would result~~conversion of outstanding Convertible Notes were included in ~~a net U.S. deferred tax asset at~~the computation of diluted earnings (loss) per share for the three and nine months ended September 30, ~~2017 and December 31, 2016. In light~~2023 as these shares would be dilutive.

Common share equivalents for shares issuable upon the conversion of ~~TimkenSteel’s recent operating performance~~outstanding Convertible Notes were excluded from the computation of diluted earnings (loss) per share for the three months ended September 30, 2022 as these shares would be anti-dilutive. Additionally, common share equivalents for shares issuable upon the conversion of outstanding Convertible Notes were included in the U.S. and current industry conditions, the Company assessed, based upon all available evidence, and concluded that it was more likely than not that it would not realize its U.S. deferred tax assets. As a result, in the fourth quartercomputation of 2016, the Company recorded full valuation allowance on its net U.S. deferred tax asset of $15.6 million. Going forward, the need to maintain valuation allowances against deferred tax assets in the U.S. and other affected countries will cause variability in the Company’s effective tax rate. The Company will maintain a full valuation allowance against its deferred tax assets in the U.S. and applicable foreign countries until sufficient positive evidence exists to conclude that a valuation allowance is not necessary. The increase in the effective tax ratediluted earnings (loss) per share for the nine months ended September 30, ~~2017~~2022 as these shares would be dilutive.

In the first quarter of 2023, TimkenSteel repurchased $7.5 million of outstanding principal related to the Convertible Notes. There were no repurchases related to the Convertible Notes during the second or third quarters of 2023. These repurchases of Convertible Notes reduced weighted average diluted shares outstanding by approximately 1.0 million shares and 0.7 million shares for the three and nine months ended September 30, 2023. Refer to “Note 10 – Financing Arrangements” for additional information on the Convertible Notes.

During the first half of 2022, TimkenSteel repurchased $25.2 million of outstanding principal related to the Convertible Notes. There were no repurchases related to the Convertible Notes during the third quarter of 2022. These repurchases of Convertible Notes reduced weighted average diluted shares outstanding by 2.0 million shares for the nine months ended September 30, 2022. Refer to “Note 10 – Financing Arrangements” for additional information on the Convertible Notes.

The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2023		2022			2023		2022
Numerator:
Net income (loss), basic	$	24.8	$	(13.3	)	$	68.1	$	98.3
Add convertible notes interest		0.2		—			0.8		1.5
Net income (loss), diluted	$	25.0	$	(13.3	)	$	68.9	$	99.8

Denominator:
Weighted average shares outstanding, basic		44.1		46.0			44.0		46.3
Dilutive effect of stock-based awards		2.1		—			2.0		2.1
Dilutive effect of convertible notes		1.7		—			2.0		3.9
Weighted average shares outstanding, diluted		47.9		46.0			48.0		52.3

Basic earnings (loss) per share	$	0.56	$	(0.29	)	$	1.55	$	2.12
Diluted earnings (loss) per share	$	0.51	$	(0.29	)	$	1.43	$	1.91

Note9-Inventories

The components of inventories, net of reserves as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023			December 31, 2022
Manufacturing supplies	$	49.0		$	36.9
Raw materials		20.4			23.9
Work in process		137.5			94.7
Finished products		49.0			37.4
Gross inventory		255.9			192.9
Allowance for inventory reserves		(0.5	)		(0.5	)
Total inventories, net	$	255.4		$	192.4

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Note10-Financing Arrangements

For a detailed discussion of the Company's long-term debt and credit arrangements, refer to “Note 14 - Financing Arrangements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The following table summarizes the current and non-current debt as of September 30, 2023 and December 31, 2022:


	September 30, 2023		December 31, 2022
Credit Agreement	$	—	$	—
Convertible Senior Notes due 2025		13.1		20.4
Total debt	$	13.1	$	20.4
Less current portion of debt		13.1		20.4
Total non-current portion of debt	$	—	$	—

Amended Credit Agreement

On September 30, 2022, TimkenSteel Corporation (the “Company”), as borrower, and certain domestic subsidiaries of the Company, as subsidiary guarantors (the “Subsidiary Guarantors”), entered into a Fourth Amended and Restated Credit Agreement (the “Amended Credit Agreement”), with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and the lenders party thereto (collectively, the “Lenders”), which further amends and restates the Company’s existing secured Third Amended and Restated Credit Agreement, dated as of October 15, 2019.

As of September 30, 2023, the amount available under the Amended Credit Agreement was $293.7 million, reflective of the Company’s asset borrowing base with no outstanding borrowings. Additionally, the Company is ~~primarily~~in compliance with all covenants outlined in the Amended Credit Agreement.

Convertible Senior Notes due 2025

The principal amount of the Convertible Senior Notes due 2025 upon issuance was $46.0 million. Transaction costs related to the Convertible Senior Notes due 2025 incurred upon issuance were $1.5 million. These costs are amortized to interest expense over the term of the notes. The Convertible Senior Notes due 2025 mature on December 1, 2025. The Convertible Senior Notes due 2025 are convertible at the option of holders in certain circumstances and during certain periods into the Company’s common shares, cash, or a combination thereof, at the Company’s election.

The Indenture for the Convertible Senior Notes due 2025 provides that notes will become convertible during a quarter when the share price for 20 trading days during the final 30 trading days of the immediately preceding quarter was greater than 130% of the conversion price. This criterion was met during the third quarter of 2023 and as such the notes can be converted at the option of the holders beginning October 1 through December 31, 2023. Whether the notes will be convertible following such period will depend on if this criterion, or another conversion condition, is met in the future. As such, the Convertible Senior Notes due 2025 are classified as a current liability in the Consolidated Balance Sheets as of September 30, 2023. This criterion was also met as of December 31, 2022. To date, no holders have elected to convert their notes during any optional conversion periods.

For details regarding all conversion mechanics and methods of settlement, refer to the Indenture for the Convertible Senior Notes due 2025 filed as an exhibit to a ~~discrete~~Form 8-K on December 15, 2020 and incorporated by reference in our most recent 10-K filing.

In the first quarter of 2023, TimkenSteel repurchased a total of $7.5 million aggregate principal amount of its Convertible Senior Notes due 2025. Total cash paid to noteholders was $18.7 million. A loss on extinguishment of debt of $11.4 million was recognized, including a charge of ~~approximately $1.0~~$0.2 million ~~recorded~~for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs. There were no repurchases related to the Convertible Notes in the second or third quarters of 2023.

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For additional details regarding the Convertible Notes please refer to “Note 14 - Financing Arrangements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The components of the Convertible Senior Notes due 2025 as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023			December 31, 2022
Principal	$	13.3		$	20.8
Less: Debt issuance costs, net of amortization		(0.2	)		(0.4	)
Convertible Senior Notes due 2025, net	$	13.1		$	20.4

The following table sets forth interest expense recognized specifically related to the Convertible Notes:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Contractual interest expense	$	0.2	$	0.3	$	0.7	$	1.4
Amortization of debt issuance costs		—		—		0.1		0.1
Total	$	0.2	$	0.3	$	0.8	$	1.5

The total cash interest paid for the nine months ended September 30, 2023 and 2022 was $1.3 million and $2.3 million, respectively.

Fair Value Measurement

The fair value of the Convertible Senior Notes due 2025 was approximately $37.0 million and $53.4 million as of September 30, 2023 and December 31, 2022, respectively. The fair value of the Convertible Senior Notes due 2025, which falls within Level 2 of the fair value hierarchy as defined by applicable accounting guidance, is based on a valuation model primarily using observable market inputs and requires a recurring fair value measurement on a quarterly basis.

TimkenSteel’s Credit Facility is variable-rate debt. As such, any outstanding carrying value is a reasonable estimate of fair value as interest rates on these borrowings approximate current market rates. This valuation falls within Level 2 of the fair value hierarchy and is based on quoted prices for similar assets and liabilities in active markets that are observable either directly or indirectly. There were no outstanding borrowings on the Credit Facility as of September 30, 2023 and December 31, 2022.

Interest (Income) Expense, net

The following table provides the components of interest (income) expense, net for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Interest expense	$	0.6		$	0.9		$	1.9		$	3.0
Interest income		(2.4	)		(1.1	)		(6.9	)		(1.4	)
Interest (income) expense, net	$	(1.8	)	$	(0.2	)	$	(5.0	)	$	1.6

Interest income primarily relates to interest earned on cash invested in a money market fund and deposits with financial institutions. The carrying value, which approximates the fair value, of the Company’s money market investment was $96.2 million as of September 30, 2023. The money market fund is a cash equivalent and is included in cash and cash equivalents on the Consolidated Balance Sheets. The fund consists of highly liquid investments with an average maturity of three months or less and falls within Level 1 of the fair value hierarchy as defined by applicable accounting guidance. Additionally as of September 30, 2023, the Company had $118.5 million of cash held in other accounts which generate interest income at a rate similar to the money market fund.

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Treasury Shares

On December 20, 2021, TimkenSteel announced that its Board of Directors authorized a share repurchase program under which the Company may repurchase up to $50.0 million of its outstanding common shares. The share repurchase program is intended to return capital to shareholders while also offsetting dilution from annual equity compensation awards. The share repurchase program does not require the Company to acquire any dollar amount or number of shares and may be modified, suspended, extended or terminated by the Company at any time without prior notice. On November 2, 2022, the Board of Directors authorized an additional $75.0 million share repurchase program. This authorization reflects the continued confidence of the Board and senior leadership in the Company’s ability to generate sustainable through-cycle profitability while maintaining a strong balance sheet and cash flow.

For the three months ended September 30, 2023, the Company repurchased approximately 0.4 million common shares in the open market at an aggregate cost of $7.7 million, which equates to an average repurchase price of $21.82 per share. For the nine months ended September 30, 2023, the Company repurchased approximately 1.5 million common shares in the open market at an aggregate cost of $28.5 million, which equates to an average repurchase price of $18.81 per share. As of September 30, 2023, the Company had a balance of $44.5 million remaining on its authorized share repurchase program.

For the three months ended September 30, 2022, the Company repurchased approximately 1.3 million common shares in the open market at an aggregate cost of $19.7 million, which equates to an average repurchase price of $15.72 per share. For the nine months ended September 30, 2022, the Company repurchased approximately 1.9 million common shares in the open market at an aggregate cost of $32.4 million, which equates to an average repurchase price of $17.42 per share.

In October 2023, the Company repurchased approximately 0.1 million common shares in the open market at an aggregate cost of $1.9 million, which equates to an average repurchase price of $20.53 per share. As of October 31, 2023, the Company had $42.6 million remaining under its authorized share repurchase program.

Note11-Retirement and Postretirement Plans

Plan Amendments and Updates

Bargaining Plan

On October 29, 2021, the United Steelworkers ("USW") Local 1123 voted to ratify a new four-year contract (the “Contract”). The Contract is in effect until September 27, 2025 and resulted in several changes to the Bargaining Plan which increased the pension liability by $14.2 million in 2021. These plan amendments were recognized in other comprehensive income (loss) in 2021 and began to be amortized as part of the pension net periodic benefit cost in the first quarter of ~~2017.~~2022. The primary change that drove the increase in the pension liability was the addition of a full lump sum form of payment for participants commencing benefits on or after January 1, 2022. In addition, the plan is now closed to new entrants effective January 1, 2022.

The timing and amount of future required pension contributions is significantly affected by asset returns and actuarial assumptions. Based on the results of the January 1, 2023 actuarial funding valuation, the company estimates required Bargaining Plan contributions of approximately $40 million in 2024. Required future pension contribution timing and amounts are subject to significant change based on future investment performance, Company estimates and actuarial assumptions, as well as current funding laws.

Salaried Plan

During the fourth quarter of 2021, termination of the Salaried Plan was approved by the TimkenSteel Board of Directors. Participants were notified in January 2022 and the plan was terminated effective March 31, 2022, subject to regulatory approval, which remains outstanding. The purchase of an irrevocable annuity contract from an insurance company is expected to occur in 2024, after which time the insurance company selected will be responsible for all participant benefit payments.

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Pension Net Periodic Benefit Cost (Income)

The components of net periodic benefit cost (income) for the three months ended September 30, 2023 were as follows:


	Pension
	United States of America								United Kingdom			Mexico
	Bargaining Plan			Salaried Plan			Supplemental Plan		Pension Scheme			Pension Plan		Total Pension			Postretirement Plans
Service cost	$	2.4		$	0.2		$	—	$	—		$	—	$	2.6		$	0.2
Interest cost		6.5			1.6			0.2		0.5			—		8.8			1.2
Expected return on plan assets		(6.7	)		(1.8	)		—		(0.6	)		—		(9.1	)		(0.9	)
Amortization of prior service cost		0.3			—			—		—			—		0.3			(1.5	)
Net remeasurement losses (gains)		—			(1.0	)		—		—			—		(1.0	)		—
Net Periodic Benefit Cost (Income)	$	2.5		$	(1.0	)	$	0.2	$	(0.1	)	$	—	$	1.6		$	(1.0	)

The components of net periodic benefit cost (income) for the three months ended September 30, 2022 were as follows:


	Pension
	United States of America								United Kingdom			Mexico
	Bargaining Plan			Salaried Plan			Supplemental Plan		Pension Scheme			Pension Plan		Total Pension			Postretirement Plans
Service cost	$	2.9		$	0.1		$	—	$	—		$	—	$	3.0		$	0.3
Interest cost		9.4			1.8			0.2		0.4			—		11.8			0.8
Expected return on plan assets		(11.4	)		(1.2	)		—		(0.9	)		—		(13.5	)		(0.9	)
Amortization of prior service cost		0.3			—			—		—			—		0.3			(1.5	)
Settlements		(2.7	)		—			—		—			—		(2.7	)		—
Net remeasurement losses (gains)		5.4			2.1			—		—			—		7.5			—
Net Periodic Benefit Cost (Income)	$	3.9		$	2.8		$	0.2	$	(0.5	)	$	—	$	6.4		$	(1.3	)

The components of net periodic benefit cost (income) for the nine months ended September 30, 2023 were as follows:


	Pension
	United States of America								United Kingdom			Mexico
	Bargaining Plan			Salaried Plan			Supplemental Plan		Pension Scheme			Pension Plan		Total Pension			Postretirement Plans
Service cost	$	7.2		$	0.6		$	—	$	—		$	—	$	7.8		$	0.6
Interest cost		19.5			4.9			0.6		1.5			—		26.5			3.6
Expected return on plan assets		(20.1	)		(5.6	)		—		(1.8	)		—		(27.5	)		(2.7	)
Amortization of prior service cost		0.9			—			—		—			—		0.9			(4.5	)
Net remeasurement losses (gains)		—			1.7			—		—			—		1.7			—
Net Periodic Benefit Cost (Income)	$	7.5		$	1.6		$	0.6	$	(0.3	)	$	—	$	9.4		$	(3.0	)

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The components of net periodic benefit cost (income) for the nine months ended September 30, 2022 were as follows:


	Pension
	United States of America									United Kingdom			Mexico
	Bargaining Plan			Salaried Plan			Supplemental Plan			Pension Scheme			Pension Plan		Total Pension			Postretirement Plans
Service cost	$	11.1		$	0.3		$	—		$	—		$	—	$	11.4		$	0.9
Interest cost		24.4			4.8			0.5			1.2			—		30.9			2.5
Expected return on plan assets		(40.2	)		(4.0	)		—			(2.7	)		—		(46.9	)		(2.7	)
Amortization of prior service cost		0.9			—			—			—			—		0.9			(4.5	)
Settlements		(2.7	)		—			—			—			—		(2.7	)		—
Net remeasurement losses (gains)		(39.4	)		7.4			(2.5	)		—			—		(34.5	)		—
Net Periodic Benefit Cost (Income)	$	(45.9	)	$	8.5		$	(2.0	)	$	(1.5	)	$	—	$	(40.9	)	$	(3.8	)

The Bargaining Plan, Salaried Plan, and Supplemental Plan have a provision that permits employees to elect to receive their pension benefits in a lump sum upon retirement. The Company's accounting policy is to recognize settlements during the quarter in which it is projected that the costs of all settlements during the year will be greater than the sum of the service cost and interest cost components.

In the first quarter of 2023, the cumulative cost of all lump sum payments was projected to exceed the sum of the service and interest cost components of net periodic pension cost for the Salaried Plan. As a result, the Company completed a full remeasurement of its pension obligations and plan assets associated with the Salaried Plan during each quarter of 2023.

During the first quarter of 2022, the Company completed a full remeasurement of its pension obligations and plan assets associated with the Supplemental Plan. No remeasurement was made in the second and third quarters of 2022 related to the Supplemental Plan, as no further lump sum payments were made. The Salaried Plan's pension obligations and plan assets were remeasured during each quarter of 2022. We also completed a full remeasurement of the Bargaining Plan's pension obligations and plan assets during the second and third quarters of 2022.

Note 12 – Stock-Based Compensation

During the nine months ended September 30, 2023the Board of Directors granted 383,519 time-based restricted stock units and 211,639 performance-based restricted stock units, which relates to the annual grant to our employees and grants to the Board of Directors. During the nine months ended September 30, 2022the Board of Directors granted 339,453 time-based restricted stock units and 178,467 performance-based restricted stock units, which relates to the annual grant to our employees and Board of Directors.

Time-based restricted stock units are issued with the fair value equal to the closing market price of TimkenSteel common shares on the date of grant. These restricted stock units do not have any performance conditions for vesting. Expense is recognized over the service period, adjusted for any forfeitures that occur during the vesting period. The weighted average fair value of the restricted stock units granted during the nine months ended September 30, 2023 was $18.51 per share.

Performance-based restricted stock units issued in 2023 vest based on achievement of a total shareholder return (“TSR”) metric. The TSR metric is considered a market condition, which requires TimkenSteel to reflect it in the fair value on grant date using an advanced option-pricing model. The fair value of each performance share was therefore determined using a Monte Carlo valuation model, a generally accepted lattice pricing model under ASC 718 – Stock-based Compensation. The Monte Carlo valuation model, among other factors, uses commonly-accepted economic theory underlying all valuation models, estimates fair value using simulations of future share prices based on stock price behavior and considers the correlation of peer company returns in determining fair value. The fair value of the performance-based restricted stock units granted during the nine months ended September 30, 2023 was $23.13 per share.

TimkenSteel recognized stock-based compensation expense of $3.0 million and $8.5 million for the three and nine months ended September 30, 2023, compared to $2.2 million and $6.5 million for the three and nine months ended September 30, 2022. Future stock-based compensation expense related to the unvested portion of all awards is approximately $15.1 million. The future expense is expected to be recognized over the remaining vesting periods through 2026.

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Note13- ~~Contingencies~~Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) for the nine months ended September 30, 2023 and 2022 by component were as follows:


	Foreign Currency Translation Adjustments			Pension and Postretirement Liability Adjustments			Total
Balance as of December 31, 2022	$	(6.8	)	$	21.5		$	14.7
Other comprehensive income (loss) before reclassifications, before income tax		(0.5	)		—			(0.5	)
Amounts reclassified from accumulated other comprehensive income (loss), before income tax		—			(3.7	)		(3.7	)
Amounts deferred to accumulated other comprehensive income (loss), before income tax		—			1.2			1.2
Tax effect		—			—			—
Net current period other comprehensive income (loss), net of income taxes		(0.5	)		(2.5	)		(3.0	)
Balance as of September 30, 2023	$	(7.3	)	$	19.0		$	11.7

	Foreign Currency Translation Adjustments			Pension and Postretirement Liability Adjustments			Total
Balance as of December 31, 2021	$	(5.1	)	$	25.8		$	20.7
Other comprehensive income (loss) before reclassifications, before income tax		(5.4	)		—			(5.4	)
Amounts reclassified from accumulated other comprehensive income (loss), before income tax		—			(3.3	)		(3.3	)
Tax effect		—			0.6			0.6
Net current period other comprehensive income (loss), net of income taxes		(5.4	)		(2.7	)		(8.1	)
Balance as of September 30, 2022	$	(10.5	)	$	23.1		$	12.6

The amount reclassified from accumulated other comprehensive income (loss) in the nine months ended September 30, 2023 and 2022 for the pension and postretirement liability adjustment was included in other (income) expense, net in the unaudited Consolidated Statements of Operations.

Note14–Contingencies

TimkenSteel has a number of loss exposures incurred in the ordinary course of business, such as environmental claims, product warranty claims, employee-related matters, and other litigation. Establishing loss reserves for these matters requires management’s estimate and judgment regarding risk exposure and ultimate liability or realization. These loss reserves are reviewed periodically and adjustments are made to reflect the most recent facts and circumstances. Accruals related to environmental claims represent management’s best estimate of the fees and costs associated with these claims. Although it is not possible to predict with certainty the outcome of such claims, management believes that their ultimate dispositions should not have a material adverse effect on our financial position, cash flows or results of operations. As of September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, TimkenSteel had a ~~$0.7~~$0.9 million and ~~$0.2~~a $1.1 million contingency reserve, respectively, related to loss exposures incurred in the ordinary course of business.

~~Environmental Matters~~

From time to time, TimkenSteel may be a party to lawsuits, claims or other proceedings related to environmental matters and/or may receive notices of potential violations of environmental laws and regulations from the U.S. Environmental Protection Agency (EPA) and similar state or local authorities. Accruals related to such environmental matters represent management’s best estimate of the fees and costs associated with these matters. Although it is not possible to predict with certainty the outcome of such matters, management believes that their ultimate dispositions should not have a material adverse effect on TimkenSteel’s financial position, cash flows, or results of operations. As of September 30, 2017 and December 31, 2016, TimkenSteel had a $0.5 million and a $0.6 million reserve for such environmental matters, respectively, classified as other current and non-current liabilities on the Unaudited Consolidated Balance Sheets.

~~The following is a rollforward of the accrual related to environmental matters for the nine months ended September 30, 2017 and 2016:~~

Nine Months Ended September 30,
2017 2016
Beginning Balance, January 1
$0.6

$0.8
Expenses 0.1
—
Payments (0.2 ) (0.2 )
Ending Balance, September 30
$0.5

$0.6

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~~ITEM~~

Item 2. ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(dollars in millions, except per share data)

Business Overview

TimkenSteel Corporation (we, us, our, the Company or TimkenSteel) was incorporated in Ohio on October 24, 2013, and became an independent, publicly traded company as the result of a spinoff from The Timken Company (Timken) on June 30, 2014.

We manufacture alloy steel, as well as carbon and micro-alloy steel, ~~with an annual melt capacity of approximately 2 million tons and shipment capacity of 1.5 million tons.~~using electric arc furnace ("EAF") technology. Our portfolio includes special bar quality ~~(SBQ)~~(“SBQ”) bars, seamless mechanical tubing ~~(tubes) and value-add solutions,~~(“tubes”), manufactured components such as precision steel ~~components. In addition,~~components, and billets. Additionally, we ~~supply machining and thermal treatment services, as well as~~ manage raw material recycling programs, which are used internally as a feeder system for our melt ~~operations.~~operations and allow us to sell scrap not used in our operations to third parties. Our products and ~~services~~solutions are used in a diverse range of demanding applications in the following market sectors: ~~oil and gas; oil country tubular goods (OCTG); automotive;~~ industrial equipment; mining; construction; rail; ~~aerospace and~~ defense; heavy truck; agriculture; power generation; automotive; and ~~power generation.~~

~~Based on our knowledge of the steel industry, we believe we are the only focused SBQ steel producer in North America~~oil and have the largest SBQ steel large bar (6-inch diameter and greater) production capacity among the North American steel producers. In addition, we are the only steel manufacturer able to produce rolled SBQ steel large bars up to 16-inches in diameter. gas.

SBQ steel is made to restrictive chemical compositions and high internal purity levels and is used in critical mechanical applications. We make these products from nearly 100% recycled steel, using our expertise in raw materials to create ~~custom~~high-quality steel ~~products with a competitive cost structure similar to that of a high-volume producer.~~products. We focus on creating tailored products ~~and services~~ for our ~~customers’ most demanding applications.~~respective end-market sectors. Our engineers are experts in both materials and applications, so we can work closely with each customer to deliver flexible solutions related to our products as well as to their applications and supply chains. ~~We believe our unique operating model and production assets give us a competitive advantage in our industry.~~

The SBQ ~~bars~~bar, tube, and ~~tubes~~billet production processes take place at our Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars, ~~and~~ seamless mechanical tubes and billets we produce and includes three manufacturing facilities: the Faircrest, Harrison, and Gambrinus facilities. Our ~~value-add solutions~~ production ~~processes take~~of manufactured components takes place at ~~three~~two downstream manufacturing facilities: ~~TimkenSteel Material Services (Houston, TX),~~ Tryon Peak (Columbus, ~~NC),~~North Carolina) and St. Clair (Eaton, ~~OH)~~Ohio). Many of the production processes are integrated, and the manufacturing facilities produce products that are sold in all of our market sectors. As a result, investments in our facilities and resource allocation decisions affecting our operations are designed to benefit the overall business, not any specific aspect of the business.

During the second half of 2022, the Faircrest melt shop experienced unplanned operational downtime. TimkenSteel recognized insurance recoveries of $11.3 million related to the unplanned downtime in the first half of 2023, of which $9.8 million was recorded during the first quarter and $1.5 million was recorded in the second quarter. Additional amounts, if any, and timing of potential recoveries are uncertain at this time. Refer to “Note 6 - Other (Income) Expense, net” in the Notes to the Consolidated Financial Statements for additional information. For further information related to previous insurance recoveries, refer to "Note 7 - Other (Income) Expense, net" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The ~~collective bargaining agreement between~~lead time for our products varies based on product type and specifications. As of the date of this filing, our lead times for bar products currently extend to mid-December 2023 and tube product lead times extend into February 2024.

We conduct our business activities and report financial results as one business segment. The presentation of financial results as one reportable segment is consistent with the way we operate our business and is consistent with the manner in which the CODM evaluates performance and makes resource and operating decisions for the business as described above. Furthermore, the Company ~~and~~notes that monitoring financial results as one reportable segment helps the ~~United Steelworkers (USW) Local 1123, which had an expiration date of September 25, 2017 has been extended, and we remain in discussions~~CODM manage costs on a consolidated basis, consistent with ~~USW representatives regarding a new collective bargaining agreement. We continue to operate uninterrupted under~~ the ~~terms of the existing collective bargaining agreement.~~

~~Capital Investments~~

Our recent capital investments are expected to significantly strengthen our position as a leader in providing differentiated solutions for the energy, industrial and automotive market sectors, while enhancing our operational performance and customer service capabilities.

On July 17, 2014, we began investing in additional advanced quench-and-temper heat-treat capacity. The approximately $40 million facility will perform quench-and-temper heat-treat operations and, we believe, will have capacity for up to 50,000 process-tons annually of 4-inch to 13-inch bars and tubes. This facility will be located in Perry Township, Ohio on the siteintegrated nature of our Gambrinus Steel Plant near three existing thermal treatment facilities. This facility will be larger than each of our three existing thermal treatment facilities in Canton, Ohio. The Company anticipates beginning operations in the fourth quarter of 2017.

operations.

Impact of Raw Material Prices ~~and LIFO~~

In the ordinary course of business, we are exposed to the volatility of the costs of our raw materials. For example, the impact of global conflicts could exacerbate inflationary pressures throughout the global economy and lead to potential market disruptions, such as significant volatility in commodity prices and supply chain disruptions. Although our business has not been materially impacted by current conflicts to date, it is difficult to predict the extent to which our operations, or those of our suppliers, will be impacted in the future.

Whenever possible, we manage our exposure to commodity risks primarily through the use of supplier pricing agreements that enable us to establish the purchase prices for certain inputs that are used in our manufacturing process. We also utilize a raw material and natural gas surcharge mechanism ~~that~~when pricing products to our customers.

There are two components of our raw material surcharge. One component is related to the scrap metal content in our finished product and is based on the published No. 1 busheling scrap index. The other component is related to alloy material content in our finished product and is based on published prices for nickel, molybdenum, vanadium, chromium, and manganese. The natural gas surcharge is only applicable when the price of natural gas exceeds a certain dollar amount per MMBtu.

Our surcharge mechanisms are designed to mitigate the impact of increases or decreases in raw material costs, although generally with a lag effect. This timing effect can result in raw material spread whereby costs can be over- or under-recovered in certain periods. While the

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surcharge generally protects gross profit, it has the effect of diluting gross margin as a percent of sales.

We present the raw material spread impact on gross profit for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022 in the gross profit charts included within the results of operations section below.

Results of Operations

Net Sales

The charts below present net sales and shipments for the three months ended September 30, 2023 and 2022.

Net sales for the three months ended September 30, 2023 were $354.2 million, an increase of $37.4 million, or 11.8% compared with the three months ended September 30, 2022. The increase in net sales was primarily driven by favorable price/mix and higher volumes, partially offset by unfavorable surcharges. Favorable price/mix of $28.1 million was due to higher base prices across all end-market sectors. Higher volumes of 17.3 thousand ship tons resulted in a net sales increase of $22.7 million. The decrease in surcharges of $13.4 million was primarily due to a decrease in surcharge revenue per ton. Excluding surcharges, net sales increased $50.8 million or 23.4%. Shipments and net sales in the prior year were also negatively impacted by the availability of inventory as a result of unplanned melt shop downtime in the third quarter of 2022.

The charts below present net sales and shipments for the nine months ended September 30, 2023 and 2022.

Net sales for the nine months ended September 30, 2023 were $1,034.3 million, a decrease of $50.2 million, or 4.6% compared with the nine months ended September 30, 2022. The decrease in net sales was driven by lower surcharges and volumes, partially offset by favorable price/mix. Lower market prices for scrap drove the unfavorable surcharges of $87.3 million, partially offset by higher alloy prices per ton. Lower volumes of 37.6 thousand ship tons resulted in a net sales decrease of $52.1 million, partially driven by the availability of finished

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~~We value approximately 64%~~

goods inventory for shipment. Favorable price/mix of ~~our inventory utilizing~~$89.2 million was primarily due to higher base prices across all end-market sectors. Excluding surcharges, net sales increased $37.1 million or 5.1%.

Gross Profit

The chart below presents the ~~LIFO inventory valuation method. Changes~~drivers of the gross profit variance from the three months ended September 30, 2022 to the three months ended September 30, 2023.

Gross profit for the three months ended September 30, 2023 increased $45.4 million, or 810.7% compared with the three months ended September 30, 2022. The increase was primarily driven by favorable price/mix, lower manufacturing costs, higher volumes and favorable raw material spread. Favorable price/mix was due to higher base prices across all end-market sectors. Lower manufacturing costs were primarily driven by increased fixed cost leverage on higher production given the unplanned melt shop downtime in the third quarter of 2022. Raw material spread was favorable due to higher scrap and alloy prices.

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The chart below presents the drivers of the gross profit variance from the nine months ended September 30, 2022 to the nine months ended September 30, 2023.

Gross profit for the nine months ended September 30, 2023 decreased $1.9 million, or 1.3% compared with the nine months ended September 30, 2022. The decrease was driven by higher manufacturing costs, lower volume and unfavorable raw material spread, partially offset by favorable price/mix. Higher plant spend resulted in unfavorable manufacturing costs. The industrial and mobile end-market sectors were unfavorably impacted by lower volume, partially offset by favorable price/mix. Raw material spread was unfavorable due to lower scrap prices, partially offset by higher alloy prices.

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Selling, General and Administrative Expenses

The charts below present selling, general and administrative (“SG&A”) expense for the three and nine months ended September 30, 2023 and 2022.

SG&A expense for the three months ended September 30, 2023 increased by $4.3 million, or 26.5%, compared with the same period in 2022. This increase was primarily due to higher variable compensation expense and professional services, primarily driven by the ongoing information technology transformation project.

SG&A expense for the nine months ended September 30, 2023 increased by $5.5 million, or 9.8% compared with the nine months ended September 30, 2022. This increase was primarily due to higher stock-based compensation and professional services, primarily driven by the ongoing information technology transformation project.

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Interest (Income) Expense, net

Net interest income for the three and nine months ended September 30, 2023 was $1.8 million and $5.0 million, respectively, compared with net interest income of $0.2 million and net interest expense of $1.6 million for the three and nine months ended September 30, 2022, respectively. The change was due to interest earned on cash invested in a money market fund and in other accounts which generate interest income at a rate similar to the money market fund during 2023, as well as a reduction in average outstanding borrowings compared to the same period in 2022. Refer to “Note 10 - Financing Arrangements” in the Notes to the unaudited Consolidated Financial Statements for additional information.

Other (Income) Expense, net


	Three Months Ended September 30,
	2023			2022			$ Change
Pension and postretirement non-service benefit (income) loss	$	(1.2	)	$	(3.0	)	$	1.8
Loss (gain) from remeasurement benefit plans		(1.0	)		4.8			(5.8	)
Foreign currency exchange (gain) loss		—			—			—
Insurance recoveries		—			(1.5	)		1.5
Miscellaneous (income) expense		0.2			(0.1	)		0.3
Total other (income) expense, net	$	(2.0	)	$	0.2		$	(2.2	)


	Nine Months Ended September 30,
	2023			2022			$ Change
Pension and postretirement non-service benefit (income) loss	$	(3.7	)	$	(19.8	)	$	16.1
Loss (gain) from remeasurement of benefit plans		1.7			(37.2	)		38.9
Foreign currency exchange (gain) loss		(0.1	)		(0.1	)		—
Insurance recoveries		(11.3	)		(1.5	)		(9.8	)
Miscellaneous (income) expense		0.3			(0.2	)		0.5
Total other (income) expense, net	$	(13.1	)	$	(58.8	)	$	45.7

Non-service related pension and other postretirement benefit income, for all years, consists primarily of the interest cost, expected return on plan assets and amortization components of net periodic cost.

The TimkenSteel Corporation Bargaining Unit Pension Plan ("Bargaining Plan"), the TimkenSteel Corporation Retirement Plan (“Salaried Plan”), and the Supplemental Pension Plan of TimkenSteel Corporation ("Supplemental Plan") each have a provision that permits employees to elect to receive their pension benefits in a lump sum upon retirement. In the first quarter of 2023, the cumulative cost of ~~raw materials~~all lump sum payments was projected to exceed the sum of the service costs and ~~production activities are~~interest cost components of net periodic pension cost for the Salaried Plan. As a result, the Company completed a full remeasurement of its pension obligations and plan assets associated with the Salaried Plan during each quarter of 2023.

A gain of $1.0 million from the remeasurement of the Salaried Plan was recognized ~~in cost of products sold~~for the three months ended September 30, 2023. The gain for the three months ended September 30, 2023 was due to a $6.5 million decrease in the ~~current period even though~~liability mainly driven by an increase in the discount rate, partially offset by $5.5 million of investment losses on plan assets. For the nine months ended September 30, 2023, the loss of $1.7 million was primarily related to investment losses on plan assets of $5.6 million and lump sum basis losses of $1.3 million, partially offset by a decrease in the pension liability of $5.2 million due to an increase in the discount rate.

A net loss of $4.8 million from the remeasurement of these ~~materials~~benefit plans was recognized for the three months ended September 30, 2022. This loss was due to $73.6 million of investment losses on plan assets and ~~other costs may have been incurred~~lump sum basis losses, partially offset by a gain of $68.8 million primarily driven by a decrease in ~~different periods~~the pension liability due to an increase in discount rate.

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For more details on the aforementioned remeasurements, refer to “Note 11 - Retirement and Postretirement Plans.”

During the second half of 2022, the Faircrest melt shop experienced unplanned operational downtime. TimkenSteel recognized insurance recoveries of $11.3 million related to the unplanned downtime in the first half of 2023, of which $9.8 million was recorded during the first quarter and $1.5 million was recorded in the second quarter. Additional amounts, if any, and timing of potential recoveries are uncertain at ~~significantly different values~~this time. For further information related to previous insurance recoveries, refer to "Note 7 - Other (Income) Expense, net" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Provision for Income Taxes


	Three Months Ended September 30,
	2023			2022			$ Change
Provision (benefit) for income taxes	$	9.8		$	0.7		$	9.1
Effective tax rate		28.3	%		(5.6	)%		33.9	%


	Nine Months Ended September 30,
	2023			2022			$ Change
Provision (benefit) for income taxes	$	24.6		$	3.1		$	21.5
Effective tax rate		26.5	%		3.1	%		23.4	%

The provision for income taxes for the quarter ended September 30, 2023 was $9.8 million compared to a provision for income taxes of $0.7 million in 2022. The change from the prior year is primarily related to higher federal and state taxes due to the ~~length~~reversal of ~~time~~the Company's full valuation allowance as of ~~our production cycle. In a period~~December 31, 2022, which offset the prior year utilization of ~~rising raw material prices, cost~~loss carryforwards. Additionally, there are limitations on the tax deductibility of ~~products sold recognized under LIFO is generally higher than~~ the ~~cash costs incurred to acquire~~first quarter 2023 loss on extinguishment of debt on the ~~inventory sold. Conversely, in a period~~Convertible Senior Notes due 2025.

Table of declining raw material prices, cost of products sold recognized under LIFO is generally lower than cash costs incurred to acquire the inventory sold. In periods of rising inventories and deflating raw material prices, the likely result will be a positive impact to net income. Conversely, in periods of rising inventories and increasing raw materials prices, the likely result will be a negative impact to net income.

~~Results of Operations~~

Three Months Ended September 30,
2017 2016 Increase (Decrease) % Change
Net sales
$339.1

$213.8

$125.3
58.6 %
Net sales, excluding surcharges 261.2
184.9
76.3
41.3 %
Gross profit 18.5
7.5
11.0
146.7 %
Gross margin 5.5 % 3.5 % NM
200 bps
Selling, general and administrative expenses 22.5
21.8
0.7
3.2 %
Net income (5.9 ) (22.2 ) 16.3
(73.4 )%
Average scrap index per ton (30 day lag) 374
272
102
37.5 %
Average selling price per ton, including surcharges
$1,170

$1,202

($32 ) (2.7 )%
Shipments (in tons) 289,942
177,823
112,119
63.1 %
Melt utilization 74 % 44 % NM
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Nine Months Ended September 30,
2017 2016 Increase (Decrease) % Change
Net sales
$987.8

$654.8

$333.0
50.9 %
Net sales, excluding surcharges 773.8
587.2
186.6
31.8 %
Gross profit 59.3
25.2
34.1
135.3 %
Gross margin 6.0 % 3.8 % NM
220 bps
Selling, general and administrative expenses 67.7
66.8
0.9
1.3 %
Net loss (9.9 ) (38.5 ) 28.6
74.3 %
Average scrap index per ton (30 day lag) 353
229
124
54.1 %
Average selling price per ton, including surcharges
$1,143

$1,183

($40 ) (3.4 )%
Shipments (in tons) 864,446
553,646
310,800
56.1 %
Melt utilization 74 % 45 % NM
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Non-GAAP Financial Measures

Net Sales, Excluding Surcharges

The ~~table above presents~~tables below present net sales by end-market sector, adjusted to exclude ~~raw material~~ surcharges, which represents a financial measure that has not been determined in accordance with accounting principles generally accepted in the United States (“U.S. ~~GAAP.~~GAAP”). We believe presenting net sales by end-market sector, both on a gross basis and on a per ton basis, adjusted to exclude raw material and natural gas surcharges, provides additional insight into key drivers of net sales such as base price and product mix.

~~Net Sales~~

~~Net sales for the third quarter of 2017 were $339 million, an increase of $125 million compared~~ Due to the ~~third quarter of 2016. Excluding surcharges,~~fact that the surcharge mechanism can introduce volatility to our net sales, ~~increased $76 million, or 41%. The increase was~~net sales adjusted to exclude surcharges provides management and investors clarity of our core pricing and results. Presenting net sales by end-market sector, adjusted to exclude surcharges including on a per ton basis, allows management and investors to better analyze key market indicators and trends and allows for enhanced comparison between our end-market sectors.

When surcharges are included in a customer agreement and are applicable (i.e., reach the threshold amount), based on the terms outlined in the respective agreement, surcharges are then included as separate line items on a customer’s invoice. These additional surcharge line items adjust base prices to match cost fluctuations due to ~~higher~~market conditions. Each month, the company will post on the surcharges page of its external website, as well as our customer portal, the scrap, alloy, and natural gas surcharges that will be applied (as a separate line item) to invoices dated in the following month (based upon shipment volumes in the following month). All surcharges invoiced are included in GAAP net sales.


(dollars in millions, tons in thousands)
	Three Months Ended September 30, 2023
	Industrial		Mobile		Energy		Other		Total
Tons		82.4		79.1		14.3		—		175.8

Net Sales	$	173.7	$	140.1	$	35.6	$	4.8	$	354.2
Less: Surcharges		43.4		34.1		9.1		—		86.6
Base Sales	$	130.3	$	106.0	$	26.5	$	4.8	$	267.6

Net Sales / Ton	$	2,108	$	1,771	$	2,490	$	—	$	2,015
Surcharges / Ton	$	527	$	431	$	636	$	—	$	493
Base Sales / Ton	$	1,581	$	1,340	$	1,854	$	—	$	1,522

	Three Months Ended September 30, 2022
	Industrial		Mobile		Energy		Other		Total
Tons		71.3		71.2		16.0		—		158.5

Net Sales	$	146.0	$	130.0	$	36.0	$	4.8	$	316.8
Less: Surcharges		45.8		42.9		11.3		—		100.0
Base Sales	$	100.2	$	87.1	$	24.7	$	4.8	$	216.8

Net Sales / Ton	$	2,048	$	1,826	$	2,250	$	—	$	1,999
Surcharges / Ton	$	643	$	603	$	706	$	—	$	631
Base Sales / Ton	$	1,405	$	1,223	$	1,544	$	—	$	1,368

Table of ~~$124 million, offset by price/mix~~Contents

(dollars in millions, tons in thousands)


	Nine Months Ended September 30, 2023
	Industrial		Mobile		Energy		Other		Total
Tons		233.0		239.0		54.2		—		526.2

Net Sales	$	486.2	$	404.9	$	127.7	$	15.6	$	1,034.4
Less: Surcharges		132.4		103.4		37.7		—		273.5
Base Sales	$	353.8	$	301.5	$	90.0	$	15.6	$	760.9

Net Sales / Ton	$	2,087	$	1,694	$	2,356	$	—	$	1,966
Surcharges / Ton	$	568	$	433	$	696	$	—	$	520
Base Sales / Ton	$	1,519	$	1,261	$	1,660	$	—	$	1,446

	Nine Months Ended September 30, 2022
	Industrial		Mobile		Energy		Other		Total
Tons		268.3		245.5		50.0		—		563.8

Net Sales	$	529.2	$	427.0	$	107.3	$	21.0	$	1,084.5
Less: Surcharges		180.7		143.8		36.3		—		360.8
Base Sales	$	348.5	$	283.2	$	71.0	$	21.0	$	723.7

Net Sales / Ton	$	1,972	$	1,739	$	2,146	$	—	$	1,924
Surcharges / Ton	$	673	$	585	$	726	$	—	$	640
Base Sales / Ton	$	1,299	$	1,154	$	1,420	$	—	$	1,284

Table of ~~approximately $48 million. For the three months ended~~Contents

Liquidity and Capital Resources

Amended Credit Agreement

On September 30, ~~2017, ship tons increased by 112 thousand tons, or 63% compared~~2022, TimkenSteel Corporation (the “Company”), as borrower, and certain domestic subsidiaries of the Company, as subsidiary guarantors (the “Subsidiary Guarantors”), entered into a Fourth Amended and Restated Credit Agreement (the “Amended Credit Agreement”), with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and the lenders party thereto (collectively, the “Lenders”), which further amends and restates the Company’s existing secured Third Amended and Restated Credit Agreement, dated as of October 15, 2019.

The Amended Credit Agreement extended the maturity date of the asset-based revolving credit facility (the “Credit Facility”) from October 2024 to September 2027. Following the amendment, Credit Facility capacity remained at $400.0 million. Pursuant to the ~~same period in 2016, due primarily~~terms of the Amended Credit Agreement, the interest rate to ~~market penetration~~be paid on any borrowings under the Credit Facility is now based on a two-tiered schedule rather than a three-tiered schedule with applicable rates decreasing by 25 basis points, references to LIBOR rates have been updated with references to SOFR rates, the advance rate on investment-grade eligible accounts receivable has been increased from 85% to 90%, and ~~sales initiatives, including 56 thousand tons of new billet business to the tube manufacturers supplying the OCTG market.~~

~~Table of Contents~~

~~Net sales for the nine months ended 2017 were $988 million,~~there has been an increase of 51% compared to the same period in 2016. Excluding surcharges, net sales increased $187 million, or 32%. The increase was due to higher volumes of $346 million, offset by price/mix of approximately $159 million. For the nine months ended September 30, 2017, ship tons increased 311 thousand tons, or 56% compared to the same period in 2016, due primarily to market penetration and sales initiatives, including 162 thousand tons of new billet business to the tube manufacturers supplying the OCTG market.

~~Gross Profit~~

Gross profit for the third quarter of 2017 was $19 million, an increase of $11 million, or 147%, compared to gross profit of $8 million for the third quarter of 2016. The increase was driven primarily by higher volumes of approximately $21 million, favorable raw material spread of approximately $10 million and production efficiencies of approximately $26 million as a result of increased melt utilization to 74% for the third quarter of 2017 compared to 44% for the third quarter of 2016, partially offset by price/mix of approximately $39 million and higher LIFO expense of approximately $7 million.

Gross profit for the nine months ended September 30, 2017 was $59 million, an increase of $34 million, or 135%, compared to gross profit of $25 million for the same period in 2016. The increase was driven primarily by higher volumes of approximately $58 million, favorable raw material spread of approximately $32 million, a supplier refund of approximately $5 million and production efficiencies of approximately $53 million as a result of increased melt utilization to 74% for the nine months ended September 30, 2017 compared to 45% for the same period in 2016, partially offset by price/mix of approximately $99 million and higher LIFO expense of approximately $15 million.

Our surcharge mechanism is designed to mitigate the impact of increases or decreases in raw material costs, although generally with a lag effect. This timing effect can result in raw material costs being over- or under-recovered in certain periods. For the nine months ended September 30, 2017, the surcharge favorably impacted gross margin as a percent of sales.

~~Selling, General and Administrative Expenses~~

~~Selling, general and administrative (SG&A) expenses increased approximately $1 million in both the third quarter of 2017 and~~improvement in the ~~nine months ended September 30, 2017 compared~~springing fixed charge coverage ratio from 1.1x to ~~the same periods in 2016 due primarily~~1.0x. The Credit Facility remains undrawn at this time.

Refer to ~~variable compensation costs.~~

~~Interest Expense~~

Three Months Ended September 30,
2017 2016 $ Change
Cash interest paid
$0.8

$0.9

($0.1 )
Accrued interest 1.9
1.9
—
Amortization of convertible notes discount and deferred financing 1.0
1.1
(0.1 )
Total Interest Expense
$3.7

$3.9

($0.2 )

Nine Months Ended September 30,
2017 2016 $ Change
Cash interest paid
$6.0

$4.2

$1.8
Accrued interest 1.9
1.9
—
Amortization of convertible notes discount and deferred financing 3.1
1.9
1.2
Total Interest Expense
$11.0

$8.0

$3.0

Interest expense decreased $0.2 million in the third quarter of 2017 compared to the same period in 2016. Interest expense for the nine months ended September 30, 2017 increased approximately $3 million, compared to the same period in 2016, due primarily to the issuance in May 2016 of the 6.00% Convertible Senior Notes due in 2021 (Convertible Notes).

~~Table of Contents~~

~~Other Income (Expense), Net~~

Three Months Ended September 30,
2017 2016 $ Change % Change
Non-service components of benefit cost
$4.3

$3.7

($0.6 ) 16.2 %
Loss from remeasurement of benefit plans (2.3 ) (20.4 )
($18.1 ) (88.7 )%
Other (0.1 ) (0.6 )
($0.5 ) (83.3 )%
Other income (expense), net
$1.9

($17.3 )
($19.2 ) (111.0 )%

Nine Months Ended September 30,
2017 2016 $ Change % Change
Non-service components of benefit cost
$12.7

$9.9

($2.8 ) 28.3 %
Loss from remeasurement of benefit plans (2.3 ) (20.4 )
($18.1 ) (88.7 )%
Other 0.3
(1.6 )
($1.9 ) (118.8 )%
Other income (expense), net
$10.7

($12.1 )
($22.8 ) (188.4 )%

Other income (expense), net was income of $1.9 million and $10.7 million for the three and nine months ended September 30, 2017, respectively compared to expense of $17.3 million and $12.1 million in the three and nine months ended September 30, 2016, respectively. The change in the three and nine months ended September 30, 2017 is primarily due to the change in the loss from remeasurement of benefit plans. See Note 9 - Retirement and Postretirement Plans“Note 10- Financing Arrangements” in the Notes to ~~Unaudited~~the unaudited Consolidated Financial Statements for ~~a discussion regarding the loss from remeasurement of benefit plans.~~

~~Provision (Benefit) for Income Taxes~~

Three Months Ended September 30,
2017 2016 $ Change % Change
Provision (benefit) for income taxes
$0.1

($13.3 )
($13.4 ) (100.8 )%
Effective tax rate (1.5 )% 37.5 % NM
(3900) bps

Nine Months Ended September 30,
2017 2016 $ Change % Change
Provision (benefit) for income taxes
$1.2

($23.5 )
($24.7 ) (105.1 )%
Effective tax rate (14.0 )% 37.9 % NM
(5,190 ) bps

For the year ended December 31, 2016, operating losses generated in the U.S. resulted in a decrease in the carrying value of our U.S. deferred tax liability to the point that would result in a net U.S. deferred tax asset at December 31, 2016. In light of our recent operating performance in the U.S. and current industry conditions, we assessed, based upon all available evidence, and concluded that it was more likely than not that we would not realize our U.S. deferred tax assets. As a result, in the nine months ended September 30, 2017 and in the fourth quarter of 2016, we recorded full valuation allowance on our net U.S. deferred tax asset. Going forward, the need to maintain valuation allowances against deferred tax assets in the U.S. and other affected countries will cause variability in our effective tax rate. We will maintain a full valuation allowance against our deferred tax assets in the U.S. and applicable foreign countries until sufficient positive evidence exists to eliminate them. The increase in the effective tax rate for the nine months ended September 30, 2017 is primarily due to a discrete charge of approximately $1.0 million recorded in the second quarter of 2017.

~~Net Sales, Excluding Surcharges~~

The table below presents net sales by end market sector, adjusted to exclude raw material surcharges, which represents a financial measure that has not been determined in accordance with U.S. GAAP. We believe presenting net sales by end market sector adjusted to exclude raw material surcharges provides additional ~~insight into key drivers of net sales such as base price and product mix.~~

~~Table of Contents~~

Net Sales adjusted to exclude surcharges
(dollars in millions, tons in thousands)
Three Months Ended September 30,
2017 2016
Mobile Industrial Energy Other Total Mobile Industrial Energy Other Total
Tons 100.8
106.2
26.7
56.2
289.9
100.5
70.2
7.1
—
177.8

Net Sales
$127.5

$126.3

$37.7

$47.6

$339.1

$120.4

$79.7

$8.7

$5.0

$213.8
Less: Surcharges 27.1
28.8
6.4
15.6
77.9
16.3
11.3
1.3
—
28.9
Base Sales
$100.4

$97.5

$31.3

$32.0

$261.2

$104.1

$68.4

$7.4

$5.0

$184.9

Net Sales / Ton
$1,265

$1,189

$1,412

$847

$1,170

$1,198

$1,135

$1,225
N/A

$1,202
Base Sales / Ton
$996

$918

$1,172

$569

$901

$1,036

$974

$1,042
N/A

$1,040

Nine Months Ended September 30,
2017 2016
Mobile Industrial Energy Other Total Mobile Industrial Energy Other Total
Tons 324.4
308.4
69.3
162.3
864.4
317.4
216.8
19.4
—
553.6

Net Sales
$399.7

$357.1

$99.0

$132.0

$987.8

$365.8

$246.2

$27.7

$15.1

$654.8
Less: Surcharges 78.2
76.9
15.3
43.4
213.8
38.0
26.9
2.7
—
67.6
Base Sales
$321.5

$280.2

$83.7

$88.6

$774.0

$327.8

$219.3

$25.0

$15.1

$587.2

Net Sales / Ton
$1,232

$1,158

$1,429

$813

$1,143

$1,152

$1,136

$1,428
N/A

$1,183
Base Sales / Ton
$991

$909

$1,208

$546

$895

$1,033

$1,012

$1,289
N/A

$1,061

~~Balance Sheet~~

~~The following discussion is a comparison of the Consolidated Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016:~~

Current Assets September 30,
2017 December 31,
2016
Cash and cash equivalents
$25.8

$25.6
Accounts receivable, net 160.6
91.6
Inventories, net
$219.5

$164.2
Deferred charges and prepaid expenses 4.2
2.8
Other current assets 7.4
6.2
Total Current Assets
$417.5

$290.4

Refer to the Liquidity and Capital Resources section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the change in cash and cash equivalents. Accounts receivable, net increased $69 million as of September 30, 2017 compared to December 31, 2016, due to an increase in net sales of $124 million in the third quarter of 2017 compared to the fourth quarter of 2016. Inventories, net increased approximately $55 million as of September 30, 2017 compared to December 31, 2016 primarily due to efforts to align inventories with anticipated sales volumes as well as increased costs.

Property, Plant and Equipment September 30,
2017 December 31,
2016
Property, plant and equipment, net
$701.6

$741.9

Property, plant and equipment, net decreased approximately $40 million as of September 30, 2017 compared to December 31, 2016. The decrease was primarily due to depreciation expense of approximately $51 million, partially offset by capital expenditures of approximately $12 million, during the nine months ended September 30, 2017.

~~Table of Contents~~

Other Assets September 30,
2017 December 31,
2016
Pension assets
$9.8

$6.2
Intangible assets, net 20.9
25.0
Other non-current assets 6.0
6.4
Total Other Assets
$36.7

$37.6

Pension assets increased approximately $4 million as of September 30, 2017 compared to December 31, 2016, primarily driven by an annual pension contribution made in the first quarter of 2017 to the Company’s U.K. pension plan. Intangible assets, net decreased approximately $4 million as of September 30, 2017 compared to December 31, 2016, primarily due to amortization expense of $5 million recognized in the nine months ended September 30, 2017.

Liabilities and Shareholders’ Equity September 30,
2017 December 31,
2016
Current liabilities
$188.6

$130.7
Convertible notes, net 69.2
66.4
Other long-term debt 95.2
70.2
Accrued pension and postretirement costs - long-term 196.2
192.1
Deferred income taxes 0.7
—
Other non-current liabilities 13.2
13.1
Total shareholders’ equity 592.7
597.4
Total Liabilities and Shareholders’ Equity
$1,155.8

$1,069.9

Current liabilities increased approximately $58 million as of September 30, 2017 compared to December 31, 2016, primarily due to an increase in accounts payable of approximately $47 million from increased inventory levels, and higher compensation related accruals.

~~See Note 6 - Financing Arrangements in the Notes to Unaudited Consolidated Financial Statements for a discussion of the change in the Convertible Notes.~~

~~Other long-term debt increased due to borrowings of $25 million on the Amended Credit Agreement primarily to fund working capital.~~

~~Refer to Note 8 - Changes in Shareholders' Equity in the Notes to Unaudited Consolidated Financial Statements for details of the decrease in Shareholders’ Equity.~~

~~Liquidity and Capital Resources~~

information.

Convertible Notes

In May 2016, wethe Company issued $75.0 million aggregate principal amount of Convertible Senior Notes due 2021, plus an additional $11.3 million principal amount to cover over-allotments.

In December 2020, the Company entered into separate, privately negotiated exchange agreements with a limited number of holders of the Company’s then outstanding Convertible Senior Notes due 2021. Pursuant to the exchange agreements, the Company exchanged $46.0 million aggregate principal amount of Convertible Senior Notes due 2021 for $46.0 million aggregate principal amount of its new Convertible Senior Notes due 2025. The Company did not receive any cash proceeds from the issuance of the Convertible Senior Notes due 2025.

The remaining Convertible Senior Notes due 2021 matured on June 1, 2021 and were settled with a combination of cash of $38.9 million and 0.1 million shares, as most noteholders exercised their conversion option prior to maturity. The final cash payment for interest was also made to noteholders on June 1, 2021 in the amount of $1.2 million.

The Convertible Senior Notes due 2025 bear cash interest at a rate of 6.0% per year, payable semiannually on June 1 and December 1, beginning on ~~December~~June 1, ~~2016.~~2021. The Convertible Senior Notes due 2025 will mature on ~~June~~December 1, ~~2021,~~2025, unless earlier repurchased or converted. The net ~~proceeds received from the offering were $83.2~~amount of this exchange was $44.5 million, after deducting the initial underwriters’ ~~discount and~~ fees and paying other transaction costs.

The Convertible Senior Notes due 2025 are convertible at the ~~offering expenses payable. We used~~option of holders in certain circumstances and during certain periods into the ~~net proceeds to repay~~Company’s common shares, cash, or a ~~portion~~combination thereof, at the Company’s election. The Indenture for the Convertible Senior Notes due 2025 provides that notes will become convertible during a quarter when the share price for 20 trading days during the final 30 trading days of the ~~amounts outstanding under our Amended Credit Agreement.~~

~~Credit Agreement~~

~~During~~immediately preceding quarter was greater than 130% of the conversion price. This criterion was met during the third quarter of ~~2015, we projected that~~2023 and as such the notes can be converted at the option of the holders beginning October 1 through December 31, ~~2015, we would not~~2023. Whether the notes will be convertible following such period will depend on if this criterion, or another conversion condition, is met in ~~compliance with~~ the ~~interest coverage ratio covenant contained~~future. To date, no holders have elected to convert their notes during any optional conversion periods.

In the first quarter of 2023, TimkenSteel repurchased a total of $7.5 million aggregate principal amount of its Convertible Senior Notes Due 2025. Total cash paid to noteholders was $18.7 million. A loss on extinguishment of debt was recognized of $11.4 million, including a charge of $0.2 million for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs. There were no repurchases related to the Convertible Notes during the second or third quarters of 2023. As of September 30, 2023, the principal balance on the Convertible Senior Notes due 2025 is $13.3 million.

In the first half of 2022, TimkenSteel repurchased a total of $25.2 million aggregate principal amount of its Convertible Senior Notes Due 2025. Total cash paid to noteholders was $67.6 million. A loss on extinguishment of debt was recognized of $43.0 million, including a charge of $0.6 million, for unamortized debt issuance costs related to the portion of debt extinguished, as well as the related transaction costs. There were no repurchases related to the Convertible Notes during the third quarter of 2022.

For additional details regarding the Convertible Notes please refer to “Note 14 - Financing Arrangements” in ~~our then-existing revolving credit facility, due to a steeper-than-expected drop in industrial demand driven by depressed commodity prices. Accordingly,~~the Company’s Annual Report on Form 10-K for the year ended December 21, 2015, we amended and restated our existing revolving credit facility, effectively converting it from a cash flow-based facility to an asset-based facility in order to eliminate various financial covenants that are customary in cash flow-based facilities, including the interest coverage ratio covenant.

31, 2022.

Table of Contents

On February 26, 2016, we entered into Amendment No. 1 (the Amendment) to the Amended and Restated Credit Agreement dated as of December 21, 2015 (as amended by the Amendment, the Amended Credit Agreement) in order to provide more flexibility with respect to the amount and form of financing we could obtain to enhance our liquidity.

Pursuant to the Amendment, we also reduced the size of the revolving credit facility from $300 million to $265 million given that, in the near-term, it was unlikely we would have a borrowing base sufficient to support such availability. The Amended Credit Agreement also includes a block on availability equal to the greater of $28.9 million or 12.5% of the aggregate commitments (except that in the event of a mandatory reduction in the commitments, the block on availability will be equal to the greater of $20.0 million or 12.5% of the aggregate commitments), effectively reducing our borrowing base by the availability block. Refer to Note 6 - Financing Arrangements in the Notes to the Unaudited Consolidated Financial Statements and the Covenant Compliance section within Management’s Discussion and Analysis for details on the Amended Credit Agreement covenants.

~~The Amended Credit Agreement has a term of five years through June 30, 2019.~~

Additional Liquidity Considerations

The following represents a summary of key liquidity measures under the Amended Credit Agreement as of September 30, ~~2017~~2023 and December 31, ~~2016:~~

September 30,
2017 December 31, 2016
Cash and cash equivalents $25.8 $25.6

Amended Credit Agreement:
Maximum availability $265.0 $194.4
Amount borrowed 65.0 40.0
Letter of credit obligations 2.6 1.6
Availability not borrowed 197.4 152.8
Availability block 33.1 33.1
Net availability $164.3 $119.7

Total liquidity $190.1 $145.3

2022:


	September 30, 2023			December 31, 2022
Cash and cash equivalents	$	225.4		$	257.2

Credit Agreement:
Maximum availability	$	400.0		$	400.0
Suppressed availability(1)		(100.9	)		(161.2	)
Availability		299.1			238.8
Amount borrowed		—			—
Letter of credit obligations		(5.4	)		(5.3	)
Availability not borrowed	$	293.7		$	233.5

Total liquidity	$	519.1		$	490.7

(1) As of September 30, 2023, and December 31, 2021, TimkenSteel had less than $400 million in collateral assets to borrow against.

Our principal sources of liquidity are cash and cash equivalents, cash flows from operations and available borrowing capacity under our Amended Credit Agreement. We currently expect that our cash and cash equivalents on hand, expected cash flows from operations and borrowings available under the Amended Credit Agreement will be sufficient to meet liquidity needs; however, these plans rely on certain underlying assumptions and estimates that may differ from actual results. Such assumptions include growing market demand and maintaining the benefits to our operating results and cash flows driven by the restructuring and cost reduction activities taken during 2015 that streamlined our organizational structure, lowered operating costs and increased liquidity.

As of September 30, ~~2017,~~2023, taking into account ~~the foregoing, as well as~~ our view of mobile, industrial, and energy ~~and automotive~~ market ~~demands~~demand for our products, ~~our 2017 operating plan~~ and our 2023 operating and long-range plan, we believe that our cash balance as of September 30, ~~2017 of $25.8 million,~~2023, projected cash generated from operations, and borrowings available under the Amended Credit Agreement, will be sufficient to satisfy our working capital needs, capital expenditures and other liquidity requirements associated with our operations, including servicing our debt and pension and postretirement benefit obligations, for at least the next twelve ~~months and through June 30, 2019, the maturity date of our Amended Credit Agreement.~~

months.

To the extent our liquidity needs prove to be greater than expected or cash generated from operations ~~are~~is less than anticipated, and cash on hand or credit availability is insufficient, we would seek additional financing to provide additional liquidity. We regularly evaluate our potential access to the equity and debt capital markets as sources of liquidity and we believe ~~that~~ additional financing would likely be available if necessary, although we can make no assurance as to the form or terms of any such financing.

We ~~would also consider additional cost reductions and further reductions of capital expenditures. Regardless, we will~~ continue to evaluate ~~additional financing or may seek~~the best use of our liquidity which would allow us to ~~refinance~~invest in profitable growth, maintain a strong balance sheet, and return capital to shareholders. We are currently anticipating capital expenditures to be approximately $50 million in 2023.

Based on the results of the January 1, 2023 actuarial funding valuation, the company estimates required Bargaining Plan contributions of approximately $40 million in 2024.

In the first quarter of 2023, we repurchased a total of $7.5 million aggregate principal amount of our Convertible Senior Notes Due 2025. In addition to reducing outstanding borrowings under the Amended Credit Agreement to provide us with additional flexibility and liquidity. Any additional financing beyond that incurred to refinance existing debt would increase our overall debt and ~~could increase~~generating annual interest ~~expense. For additional discussion regarding risk factors related to our business and our debt, see Risk Factors in our Annual Report on Form 10-K~~savings of $0.5 million, the repurchases of convertible notes reduced weighted average diluted shares outstanding for the year ended December 31, ~~2016.~~

2023 by 0.7 million shares and, on a go-forward basis, reduced diluted shares outstanding by 1.0 million shares.

In the first half of 2022, we repurchased a total of $25.2 million aggregate principal amount of our Convertible Senior Notes Due 2025. In addition to reducing outstanding debt and generating annual interest savings of $1.5 million, the repurchases of convertible notes reduced weighted average diluted shares outstanding for the year ended December 31, 2022 by 2.3 million shares and, on a go-forward basis, reduced diluted shares outstanding by 3.2 million shares.

For ~~additional details~~the three months ended September 30, 2023, the Company repurchased approximately 0.4 million common shares in the open market at an aggregate cost of $7.7 million, which equates to an average repurchase price of $21.82 per share. For the nine months ended September 30, 2023, the Company repurchased approximately 1.5 million common shares in the open market at an aggregate cost of $28.5 million, which equates to an average repurchase price of $18.81 per share. As of September 30, 2023, the Company had a balance of $44.5 million remaining on its authorized share repurchase program.

Table of Contents

Coronavirus Aid, Relief, and Economic Security Act

Due to a provision in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the Company was able to defer the employer share of Social Security payroll taxes for a specified time during 2020. During the year ended December 31, 2020, the Company deferred $6.4 million in cash payments and recorded reserves for such deferred payroll taxes in salaries, wages and benefits on the ~~Amended Credit Agreement~~Consolidated Balance Sheets, to be paid in two equal installments. The first installment in the amount of $3.2 million was paid during the fourth quarter of 2021 and the ~~Convertible Notes, please refer to Note 6 - Financing Arrangements~~second installment of $3.2 million was paid during the fourth quarter of 2022.

The CARES Act also provided for an employee retention credit (“Employee Retention Credit”), which is a refundable tax credit against certain employment taxes. The Company qualified for the tax credit in the ~~Notes~~second and third quarters of 2020 and accrued a benefit of $2.3 million in the fourth quarter of 2020 related to ~~Unaudited~~the Employee Retention Credit in other (income) expense, net on the Consolidated ~~Financial Statements.~~

~~Table~~Statements of ~~Contents~~

Operations. The Company filed for this credit in the second quarter of 2021 and received a portion of the proceeds from the Internal Revenue Service in the amount of $0.5 million during the fourth quarter of 2021. The Company received the remaining $1.8 million of cash proceeds in the first quarter of 2022.

Cash Flows

The following table reflects the major categories of cash flows for the nine months ended September 30, ~~2017~~2023 and ~~2016.~~2022. For additional details, please ~~see~~refer to the ~~Unaudited~~unaudited Consolidated Statements of Cash Flows ~~contained elsewhere~~included in this quarterly report.

Cash Flows Nine Months Ended September 30,
2017 2016
Net cash (used) provided by operating activities
($11.7 )
$55.5
Net cash used by investing activities (11.9 ) (26.1 )
Net cash provided (used) by financing activities 23.8
(48.5 )
Increase (Decrease) in Cash and Cash Equivalents
$0.2

($19.1 )


	Nine Months Ended September 30,
	2023			2022
Net cash provided (used) by operating activities	$	51.2		$	110.8
Net cash provided (used) by investing activities		(34.5	)		(12.7	)
Net cash provided (used) by financing activities		(48.2	)		(94.5	)
Increase (Decrease) in Cash and Cash Equivalents	$	(31.5	)	$	3.6

Operating activities

Net cash ~~used~~provided by operating activities for the nine months ended September 30, ~~2017~~2023 was ~~approximately $12~~$51.2 million compared to net cash provided ~~by operating activities~~ of ~~approximately $56~~$110.8 million for the nine months ended September 30, ~~2016.~~2022. The ~~$68 million decrease~~change was primarily ~~due to~~driven by lower profitability, and an increased use of cash ~~used by~~for working capital, ~~of $68 million for~~partially offset by insurance recoveries, during the nine months ended September 30, ~~2017~~2023 compared to ~~cash provided by working capital of $18 million during~~ the same time period in ~~2016. Refer to the Unaudited Consolidated Statements of Cash Flows for additional information.~~

2022.

Investing activities

Net cash used by investing activities for the nine months ended September 30, ~~2017 and 2016~~2023 was ~~approximately $12~~$34.5 million ~~and $26~~compared to net cash used of $12.7 million ~~respectively. Cash used~~ for ~~investing activities primarily relates to capital investments in our production processes. Capital spending decreased approximately $14 million due to lower spending compared to~~ the nine months ended September 30, ~~2016, as a result of targeted strategic~~2022. The change was due to higher capital ~~allocations.~~

Our business sometimes requires capital investments to maintain our plants and equipment to remain competitive and ensure we can implement strategic initiatives. Our $52 million construction in progress balance as ofexpenditures for the nine months ended September 30, ~~2017 includes: (a) $42 million relating~~2023 compared to growth initiatives (i.e., new product offerings, additional capacity and new capabilities) and continuous improvement projects; and (b) $10 million relating primarily to routine capital costs to maintain the reliability, integrity and safety of our manufacturing equipment and facilities. We expect to incur approximately $31 million of additional costs including approximately $23 million relating to additional growth initiatives and continuous improvement and approximately $8 million of additional costs to complete other remaining projects. These additional costs are expected to be incurred during the next one to three years.

same period in 2022.

Financing activities

Net cash ~~provided~~used by financing activities for the nine months ended September 30, ~~2017~~2023 was ~~approximately $24~~$48.2 million compared to net cash used ~~by financing activities~~ of ~~approximately~~ ~~$49~~$94.5 million for the nine months ended September 30, ~~2016.~~2022. The change was ~~mainly~~ due to ~~borrowings~~lower repurchases of ~~$30 million on~~Convertible Senior Notes and a lower level of common share repurchase activity under the ~~Amended Credit Agreement during the nine months ended September 30, 2017~~share repurchase program, compared to ~~repayments of $130 million on~~ the ~~Amended Credit Agreement, partially offset by the proceeds of $86.3 million from the issuance of~~same time period in 2022. Refer to “Note 10 - Financing Arrangements” for more detail related to the Convertible Senior Notes ~~during~~due in 2025 and the ~~nine months ended September 30, 2016.~~

~~Covenant Compliance~~

Under the Amended Credit Agreement, we are required to comply with certain customary covenants, including covenants that limit our ability to, among other things, (i) incur or suffer to exist certain liens, (ii) make investments, (iii) incur or guaranty additional indebtedness, (iv) enter into consolidations, mergers, acquisitions and sales of assets, (v) make distributions and other restricted payments, (vi) change the nature of our business, (vii) engage in transactions with affiliates and (viii) enter into restrictive agreements, including agreements that restrict the ability to incur liens or make distributions. Further, the Amended Credit Agreement contains financial covenants that (i) limit the amount of capital expenditures we may make to $45 million in fiscal year 2016 and $50 million in fiscal years thereafter and (ii) require the Company to maintain a minimum specified fixed charge coverage ratio for the year-to-date periods beginning January 1, 2017 and ending June 30, 2017, July 31, 2017 and August 31, 2017. The fixed charge coverage ratio is the ratio of EBITDA to fixed charges. Fixed charges include, among other things, cash interest, scheduled principal payments, cash taxes, dividends, capital expenditures, and capital lease obligation payments. As of September 30, 2017, we were in compliance with this covenant throughout the term of the Amended Credit Agreement.

~~Table of Contents~~

We expect to remain in compliance with our debt covenants for at least the next twelve months. If at any time we expect that we will be unable to meet the covenants under the Amended Credit Agreement, we would seek to further amend the Amended Credit Agreement to be in compliance and avoid a default or pursue other alternatives, such as additional financing. If, contrary to our expectations, we were unable to amend the terms of our Amended Credit Agreement to remain in compliance or refinance the debt under the Amended Credit Agreement, we would experience an event of default and all outstanding debt under the revolving credit facility would be subject to acceleration and may become immediately due and payable.

~~For additional discussion regarding risk factors related to our business and our debt, see Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016.~~

~~Dividends and Share Repurchases~~

On November 13, 2015, our Board of Directors decided to suspend the cash dividend as we continued to manage through a challenging market environment. Our Board of Directors will review the dividend as business conditions improve.

share repurchase program.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We review our critical accounting policies throughout the year.

~~There have been no material changes to these policies during the nine months ended September 30, 2017. For a summary~~

Table of the critical accounting policies and estimates that we used in the preparation of our Unaudited Consolidated Financial Statements, see our Annual Report on Form 10-K for the year ended December 31, 2016.

Contents

New Accounting Guidance

See ~~Note~~“Note 2 - Recent Accounting ~~Pronouncements~~Pronouncements” in the Notes to ~~our Unaudited~~the unaudited Consolidated Financial ~~Statements for a discussion of recently issued accounting pronouncements.~~

~~Table of Contents~~

Statements.

Forward-Looking Statements

Certain statements set forth in this Quarterly Report on Form 10-Q (including our forecasts, beliefs and expectations) that are not historical in nature are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, Management’s Discussion and Analysis of Financial Condition and Results of Operations contains numerous forward-looking statements. Forward-looking statements generally will be accompanied by words such as “anticipate,” ,“aspire,” “believe,” “could,” “estimate,” “expect,” “forecast,” “outlook,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strategic direction,” “strategy,” “target,” “will,” “would,” or other similar words, phrases or expressions that convey the uncertainty of future events or outcomes. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Form 10-Q. We caution readers that actual results may differ materially from those expressed or implied in forward-looking statements made by or on behalf of us due to a variety of factors, such as:

•

deterioration in ~~world~~global 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 impact of global conflicts on the economy, sourcing of raw materials, and commodity prices;

•

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 we operate. This includes: our ability to respond to rapid changes in customer ~~demand;~~demand including but not limited to changes in customer operating schedules due to supply chain constraints or unplanned work stoppages; the effects of customer bankruptcies or liquidations; the impact of changes in industrial business cycles; and whether conditions of fair trade exist in the U.S. markets;

•

the potential impact of pandemics, epidemics, widespread illness or other health issues, such as COVID-19 or its variants on the company's operations and financial results, including cash flows and liquidity;

•

whether we are able to successfully implement actions designed to improve profitability on anticipated terms and timetables and whether we are able to fully realize the expected benefits of such actions;

•

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;investments; and our ability to maintain appropriate relations with ~~unions~~the union that ~~represent~~represents 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, employment matters, and environmental issues and taxes, among other matters;

•

cyber-related risks, including information technology system failures, interruptions and security breaches;

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•

with respect to the company's ability to achieve its sustainability goals, including its 2030 environmental goals, the ability to meet such goals within the expected timeframe, changes in laws, regulations, prevailing standards or public policy, the alignment of the scientific community on measurement and reporting approaches, the complexity of commodity supply chains and the evolution of and adoption of new technology, including traceability practices, tools and processes;

•

the availability of financing and interest rates, which ~~affect:~~affect our cost of funds and/or ability to raise ~~capital;~~capital, including our ability to refinance and/or repay prior to or at maturity the Convertible Notes due December 1, 2025; 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;

•

the overall impact of the pension and postretirement mark-to-market accounting;

•

the effects of the conditional conversion feature of the Convertible Senior Notes due 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;

•

the consistency of melt production to meet forecasted demand levels following unplanned downtime in the second half of 2022;

•

additional amounts, if any, that the company is able to obtain from its business interruption insurance in connection with the unplanned downtime;

•

availability of property insurance coverage at commercially reasonable rates or insufficient insurance coverage to cover claims or damages;

•

the impacts from any repurchases of our common shares and convertible notes, including the timing and amount of any ~~dividend declared by our Board of Directors on our common shares;~~repurchases; and

•

those items identified under the caption Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

You 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, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Further, this report includes our current policy and intent and is not intended to create legal rights or obligations. Certain standards of measurement and performance contained in this report 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 report can or will be achieved. Inclusion of information in this report is not an indication that the subject or information is material to our business or operating results.

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~~ITEM~~

Item 3. ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our borrowings include both fixed and variable-rate debt. The ~~variable~~variable-rate debt consists principally of borrowings under our ~~Amended~~ Credit Agreement. We are exposed to the risk of rising interest rates to the extent we fund our operations with these variable-rate borrowings. As of September 30, ~~2017,~~2023, we have ~~$164.4~~$13.1 million of aggregate debt outstanding. None of our outstanding debt as of ~~which $95.2 million consists of debt with~~September 30, 2023 has variable interest ~~rates. Based on the amount of debt with variable-rate interest outstanding,~~rates, thus a 1% rise in interest rates would ~~result in an increase in~~not impact our interest expense ~~of approximately $1 million annually, with a corresponding increase~~at this point in ~~loss before income taxes of the same amount.~~

time.

Foreign Currency Exchange Rate Risk

Fluctuations in the value of the U.S. dollar compared to foreign currencies may impact our earnings. Geographically, our sales are primarily made to customers in the United States. Currency fluctuations could impact us to the extent they impact the currency or the price of raw materials in foreign countries in which our competitors operate or have significant sales.

Commodity Price Risk

In the ordinary course of business, we are exposed to market risk with respect to commodity price fluctuations, primarily related to our purchases of raw materials and energy, principally scrap steel, other ferrous and non-ferrous metals, alloys, natural gas and electricity. Additionally, the global conflicts could also exacerbate inflationary pressures throughout the global economy and lead to potential market disruptions, such as significant volatility in commodity prices and supply chain disruptions. Although our business has not been materially impacted by current conflicts to date, it is difficult to predict the extent to which our operations, or those of our suppliers, will be impacted in the future.

Whenever possible, we manage our exposure to commodity risks primarily through the use of supplier pricing agreements that enable us to establish the purchase prices for certain inputs that are used in our manufacturing business. We utilize a raw material surcharge as a component of pricing steel to pass through the cost increases of scrap, alloys and other raw materials, as well as natural gas. From time to time, we may use ~~derivative~~ financial instruments to hedge a portion of our exposure to commodity price ~~risk related to natural gas and electricity purchases.~~risk. In periods of stable demand for our products, the surcharge mechanism has worked effectively to reduce the normal time lag in passing through higher raw material costs so that we can maintain our gross margins. When demand and cost of raw materials isare lower, however, the surcharge impacts sales prices to a lesser extent.

~~ITEM~~

Item 4. ~~CONTROLS AND PROCEDURES~~


~~(a)~~	~~Disclosure Controls and Procedures~~

Controls and Procedures

(a) Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)). Based upon that evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.


~~(b)~~	~~Changes in Internal Control Over Financial Reporting~~

(b) Changes in Internal Control Over Financial Reporting

During the Company’s most recent fiscal quarter, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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~~PART~~

Part II. ~~OTHER INFORMATION~~

Other Information

Item 1. Legal Proceedings

We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of our management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Item 1A. Risk Factors

We are subject to various risks and uncertainties in the course of our business. The discussion of such risks and uncertainties may be found under Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 filed with the SEC. ~~There have been no material changes to such risk factors.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The table below provides information concerning our repurchase of common shares for the three months ended September 30, 2023.


(Dollars in millions, except per share data)	Total number of shares purchased (1)		Average price paid per share (3)		Total number of shares purchased as part of publicly announced plans or programs (1)		Maximum dollar value of shares that may yet be purchased under the plans or programs (2)
Beginning shares available							$	52.2
July, 2023		134,586	$	22.22		134,586	$	49.2
August, 2023		115,550	$	21.64		115,550	$	46.7
September, 2023		102,724	$	21.08		102,724	$	44.5
Quarter-to-date		352,860	$	21.82		352,860	$	44.5

(1)The Company may utilize various methods to repurchase shares, which could include open market repurchases, including repurchases through Rule 10b5-1 plans, privately-negotiated transactions or by other means. The actual timing, number and value of shares repurchased under the program will depend on a number of factors, including the price of the Company's shares, general market and economic conditions, capital needs and other factors.

(2) On December 20, 2021, TimkenSteel announced that its Board of Directors authorized a share repurchase program under which the Company may repurchase up to $50.0 million of its outstanding common shares. On November 2, 2022, the Board of Directors authorized an additional $75.0 million share repurchase program. The share repurchase program does not require the Company to acquire any dollar amount or number of shares and does not have an expiration date.

(3) The average price paid per share excludes any broker commissions.

Item 5. Other Information

~~None.~~

During the quarter ended September 30, 2023, officers (as defined in Exchange Act Rule 16a-1(f)) of the Company adopted written plans for the sale of the Company’s common shares intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c) (“Rule 10b5-1 trading arrangements”) as follows:

On August 21, 2023, Kevin A. Raketich, Executive Vice President and Chief Commercial Officer, adopted a 10b5-1 trading arrangement that provides for the potential sale of up to 36,918 common shares as well as up to 19,350 common shares that may be earned (net of shares withheld for taxes) upon the vesting of performance-based restricted stock units awarded for the 2021-2023 performance period, which trading arrangement is scheduled to terminate no later than August 30, 2024.

On August 24, 2023, Kristine C. Syrvalin, Executive Vice President, General Counsel and Chief Human Resources Officer, adopted a 10b5-1 trading arrangement that provides for the potential sale of up to 9,820 common shares acquired upon exercise of stock options as well as up to 33,600 common shares that may be earned (net of shares withheld for taxes) upon the vesting of performance-based restricted stock units awarded for the 2021-2023 performance period, which trading arrangement is scheduled to terminate no later than May 31, 2024.

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On August 29, 2023, Kristopher R. Westbrooks, Executive Vice President and Chief Financial Officer, adopted a 10b5-1 trading arrangement that provides for the potential sale of up to 87,388 common shares acquired upon exercise of stock options as well as up to 60,600 common shares that may be earned (net of shares withheld for taxes) upon the vesting of performance-based restricted stock units awarded for the 2021-2023 performance period, which trading arrangement is scheduled to terminate no later than May 31, 2024.

On August 29, 2023, Michael S. Williams, President and Chief Executive Officer, adopted a 10b5-1 trading arrangement that provides for the potential sale of up to 25 percent of the 635,100 common shares that may be earned (net of shares withheld for taxes) upon the vesting of performance-based restricted stock units awarded for the 2021-2023 performance period, as well as up to 25 percent of the 423,400 common shares expected to be received (net of shares withheld for taxes) upon vesting of restricted stock units on January 5, 2024 , which trading arrangement is scheduled to terminate no later than July 8, 2024.

Each of the above-named officers is currently and is expected to remain in compliance with his or her share ownership guidelines following the sale of any common shares pursuant to his or her 10b5-1 trading arrangement.

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Item 6. Exhibits



Exhibit Number		Exhibit Description
10.1*		~~Form of Severance Agreement between TimkenSteel and Certain Executive Officers~~
12.1* 31.1*		~~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*
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*
101.INS*		Inline XBRL Instance ~~Document~~Document.
101.SCH*
101.SCH*		Inline XBRL Taxonomy Extension Schema ~~Document~~Document.
101.PRE*
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.
101.CAL*
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document~~Document.
101.LAB*
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase ~~Document~~Document.
101.DEF*
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~

Document.
104
*	~~Filed herewith.~~
**	~~Furnished herewith.~~ Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Furnished herewith.

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~~SIGNATURES~~

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		TIMKENSTEEL CORPORATION


Date:	~~October 26, 2017~~ November 2, 2023	/s/ ~~Christopher J. Holding~~Kristopher R. Westbrooks
		~~Christopher J. Holding~~ Kristopher R. Westbrooks Executive Vice President and Chief Financial Officer (Principal Financial Officer)

~~Table of Contents~~

~~INDEX TO EXHIBITS~~



~~Exhibit Number~~		~~Exhibit Description~~
~~10.1~~		~~Form of Severance Agreement between TimkenSteel and Certain Executive Officers~~
~~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~~


		Page
~~PART~~Part I. Financial Information		3
Item 1.	Financial Statements	3
	Consolidated Statements of Operations (Unaudited)	3
	Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) (Unaudited)	4
	Consolidated Balance Sheets (Unaudited)	5
	Consolidated Statements of Shareholders’ Equity (Unaudited)	6
	Consolidated Statements of Cash Flows (Unaudited)	6 8
	Notes to Unaudited Consolidated Financial Statements	7 9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17 20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27 34
Item 4.	Controls and Procedures	27 34
~~PART~~Part II. Other Information		27 35
Item 1.	Legal Proceedings	27 35
Item 1A.	Risk Factors	27 35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27 35
Item 6.5.	~~Exhibits~~Other Information	28 35
Item 6.	~~Signatures~~Exhibits	37
	29Signatures	38



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
(Dollars in millions, except per share data)
Net sales		$339.1			$213.8			$987.8			$654.8
Cost of products sold	320.6			206.3			928.5			629.6
Gross Profit	18.5			7.5			59.3			25.2

Selling, general and administrative expenses	22.5			21.8			67.7			66.8
Restructuring charges	—			—			—			0.3
Operating Loss	(4.0		)	(14.3		)	(8.4		)	(41.9		)

Interest expense	3.7			3.9			11.0			8.0
Other income (expense), net	1.9			(17.3		)	10.7			(12.1		)
Loss Before Income Taxes	(5.8		)	(35.5		)	(8.7		)	(62.0		)
Provision (benefit) for income taxes	0.1			(13.3		)	1.2			(23.5		)
Net Loss		($5.9	)		($22.2	)		($9.9	)		($38.5	)

Per Share Data:
Basic loss per share		($0.13	)		($0.50	)		($0.22	)		($0.87	)
Diluted loss per share		($0.13	)		($0.50	)		($0.22	)		($0.87	)

Dividends per share		$—			$—			$—			$—



	September 30, 2017			December 31, 2016
(Dollars in millions)
ASSETS
Current Assets
Cash and cash equivalents		$25.8			$25.6
Accounts receivable, net of allowances (2017 - $2.6 million; 2016 - $2.1 million)	160.6			91.6
Inventories, net	219.5			164.2
Deferred charges and prepaid expenses	4.2			2.8
Other current assets	7.4			6.2
Total Current Assets	417.5			290.4

Property, Plant and Equipment, Net	701.6			741.9

Other Assets
Pension assets	9.8			6.2
Intangible assets, net	20.9			25.0
Other non-current assets	6.0			6.4
Total Other Assets	36.7			37.6
Total Assets		$1,155.8			$1,069.9

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable, trade		$133.8			$87.0
Salaries, wages and benefits	30.4			20.3
Accrued pension and postretirement costs	3.0			3.0
Other current liabilities	21.4			20.4
Total Current Liabilities	188.6			130.7

Non-Current Liabilities
Convertible notes, net	69.2			66.4
Other long-term debt	95.2			70.2
Accrued pension and postretirement costs	196.2			192.1
Deferred income taxes	0.7			—
Other non-current liabilities	13.2			13.1
Total Non-Current Liabilities	374.5			341.8

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 2017 and 2016 - 45.7 million shares	—			—
Additional paid-in capital	842.3			845.6
Retained deficit	(204.1		)	(193.9		)
Treasury shares - 2017 - 1.3 million; 2016 - 1.5 million	(37.6		)	(44.9		)
Accumulated other comprehensive loss	(7.9		)	(9.4		)
Total Shareholders’ Equity	592.7			597.4
Total Liabilities and Shareholders’ Equity		$1,155.8			$1,069.9



	September 30, 2017			December 31, 2016
Inventories, net:
Manufacturing supplies		$36.6			$37.9
Raw materials	31.7			16.2
Work in process	96.3			58.6
Finished products	63.5			59.6
Subtotal	228.1			172.3
Allowance for surplus and obsolete inventory	(8.6		)	(8.1		)
Total Inventories, net		$219.5			$164.2



	September 30, 2017			December 31, 2016
Property, Plant and Equipment, net:
Land		$13.4			$13.3
Buildings and improvements	418.9			420.6
Machinery and equipment	1,354.1			1,352.0
Construction in progress	51.6			63.9
Subtotal	1,838.0			1,849.8
Less allowances for depreciation	(1,136.4		)	(1,107.9		)
Property, Plant and Equipment, net		$701.6			$741.9



	September 30, 2017						December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets Subject to Amortization:
Customer relationships		$6.3		$4.0		$2.3		$6.3		$3.7		$2.6
Technology use	9.0		5.8		3.2		9.0		5.2		3.8
Capitalized software	58.5		43.1		15.4		58.9		40.3		18.6
Total Intangible Assets		$73.8		$52.9		$20.9		$74.2		$49.2		$25.0



	September 30, 2017		December 31, 2016
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017)		$12.2		$12.2
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017)	9.5		9.5
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.862% as of September 30, 2017)	8.5		8.5
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)	65.0		40.0
Total Other Long-Term Debt		$95.2		$70.2



	Three Months Ended September 30, 2017						Three Months Ended September 30, 2016
Components of net periodic benefit cost:	Pension			Postretirement			Pension			Postretirement
Service cost		$4.6			$0.4			$3.9			$0.4
Interest cost	12.3			2.1			13.2			2.4
Expected return on plan assets	(17.7		)	(1.3		)	(18.1		)	(1.5		)
Amortization of prior service cost	0.1			0.2			0.1			0.2
Net remeasurement loss	2.3			—			20.4			—
Net Periodic Benefit Cost		$1.6			$1.4			$19.5			$1.5



	Nine Months Ended September 30, 2017						Nine Months Ended September 30, 2016
Components of net periodic benefit cost:	Pension			Postretirement			Pension			Postretirement
Service cost		$13.8			$1.2			$11.7			$1.2
Interest cost	36.8			6.3			39.8			7.1
Expected return on plan assets	(52.9		)	(4.0		)	(53.6		)	(4.4		)
Amortization of prior service cost	0.3			0.8			0.4			0.8
Net remeasurement loss	2.3			—			20.4			—
Net Periodic Benefit Cost		$0.3			$4.3			$18.7			$4.7



	Three			Nine
	Months ended September 30, 2016
Cost of products sold		($13.3	)		($7.7	)
Selling, general and administrative expenses	(3.4		)	(2.8		)
		($16.7	)		($10.5	)



Property, Plant and Equipment	September 30, 2017		December 31, 2016
Property, plant and equipment, net		$701.6		$741.9