TMST - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the TimkenSteel Q1 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

now conference to speaker to like Ms. today, would hand over the your I Beeman. Jennifer ahead. go Please

Jennifer Beeman

Good to Communications and Jennifer for morning, welcome Beeman, call. XXXX TimkenSteel. Senior I'm conference Manager of and Relations TimkenSteel's Investor first quarter

me Vice Officer President; Executive President and Financial of Kris Interim as well President and Officer; Vice Commercial. today as is Executive Tom Joining Dunlap, Chief Chief Terry Westbrooks, Moline, Executive

night. our should press copy release, have issued was all You of last received which a

forward-looking statements today's defined call, conference may make During SEC. the as we by

factors Our due may our of detail also including included to the differ describe release, factors, or referenced, TimkenSteel actual of on refer the materially additional results filings, earnings XX-Q greater from our its to which which most are projected recent included those to where in reconciliations available in GAAP of list non-GAAP Please information all website SEC in implied yesterday's Form equivalent details in the financial release. is release. a XX-K variety our are and Form we earnings and and

the I'd over that, turn call to like to Terry. With Terry?

Terry Dunlap

Thank to and thank TimkenSteel. joining for this and Jennifer, for interest in everyone morning your you, us you

word a with and begin actions. safety me Let COVID-XX our about

employees thankful achieved am proud for this extremely on lowest the keep our that every in commitment safe First, to I'm shift. company including everyone every I day, the challenging ongoing some focus time, during best we of history, results and rate our of safety OSHA record. healthy and recordable

the Department business know, Regarding Security. the and the been by crisis, Ohio TimkenSteel designated has Homeland governor essential you as COVID-XX of an

of collaboratively products and early ensure wellbeing In a health the keep response are work and of operate COVID-XX has our to The security and lead vital we operating. admirably created TimkenSteel safe on the our continued our to the has pandemic cross-functional across company from uninterrupted company team factories safety to the the to March, such, employees. our employees performed country. team of the beginning that to providing As

or home U.S. so practices are of established following Employees, strictly safe CDC, health. Labor the doing and of onsite employees and Department who from can workplace Ohio Department work by

We have physical to one sick. workplace encouraged reinforced and no added we offices, vigilant work plants employees hygiene, be all personal the procedures hygiene message and with their to cleaning distancing, should enhanced in and regularly come that

last hundreds of we audits our the In efforts. diligent remain these two performed ensure to plants in in months, we

us often community Steelworkers channels We United the are communication communicating and in regularly time engagement includes have to need any in impacts concerns established workforce to our in alert regarding with and government The the health attention. officials. COVID-XX with real and with of local This of and areas

we donation respirator, have medical kits, to other taken NXX also health supplies local support community and In of including our and actions addition, the and professionals to care first-aid community organizations.

remained effort thank I under of these organization for extraordinary want to customers. who circumstances. our onsite, employees dedication during extremely challenging an am by Again, challenging families their working the operations our our sincerely X,XXX their resilience safely serve times. proud and particularly team, and I to

the as and EBITDA. first our income three pandemic during Now From quarter net operational slowdowns the customer quarter. much weeks guidance the that shipments, highlights onto in had the month. results perspective, we we early expected I'm business final resulted financial of and the encouraged achieved a unfolded quarter March of for and the To until

to especially In addition, positive. cash flow continues be

in we a and free positive quarter highest generated cash the million first free any the six In of $XX company. generation have cash million flow past $XX during the as we months. This over standalone quarter, achieved is flow

practices. well We business, across working and as with internal closely the as suppliers inventories responsibly reducing customers business continued on focus our improving proactively and numerous

on improved payable to implemented position sold million quarter. improve processes, pay we've the overall the non-core we down debt first and important, liquidity $XX accounts addition, and continue businesses, closed assets. In additional non-performing Equally and of receivable in

the XX% market segments. improvements all quarter quarter, with previous the versus shipments in For total increased

We first business, two year, of quarter, I widespread in to good the shutdowns. and began off of have COVID-XX OEMs weeks suppress over the start the and our a a to during implemented months demand final got the restrictions mentioned, as half suppliers especially but automotive the where

up ramp inventory beyond. remain in specific Our May, needs with June team to understand automotive in will customers daily plans contact the and and

large as business customer quarter remained industrial as in of open. not our customers was impacted many significantly the first Our by COVID-XX

increased Our they have industrial this has as remained align customers seen customer demand with pockets quarter. slowdowns from inventories business, of there order in in we the the In which industrial prior versus and but distributors their XX% customers strength market, to shipments demand, in recent defense are end weeks, especially our steady.

to second quarter million in year and fourth in sharply In products. business, in unknown, sharp have remains quarter, but quarter. Recently, first oil oil remainder demand energy minimum we our approximately our sales, the we last $XX quarter very we estimate a by the XXXX of quarter in XX% was primarily decline Overall, reduction demand significant to seen and customer were automotive. lower driven COVID-XX record The results energy low a of gas of first impact and impact be on a second prices beyond of expect weak pandemics the XXXX due at market our inventories from shipments the XXXX. excess up related

additional further maximize well executives’ base as and response reduction customer operating cash reducing have XX% by the to COVID-XX other XX%. and to May conserve Xst. was by the expenses, base including my salaries significant This senior executives’ from pay liquidity, the In demand as in salaries reduce effective taken resulting we crisis, actions

elected second value which XX%. reduce XX%, and of the equity their in to annual grant Our Board of Directors XXXX retainer reduce cash of by has began quarter by the their

began furloughs for plan salaried XXX(k) of salaried Xst. early XX% company's for employees. the implementing matching contributions April, rolling June effective suspend employees, will unpaid We approximately our we In

expect second throughout quarter. to We this continue the

resulting have aggressively to manufacturing We the production customer layoff all with in demand temporary operations at of reduced schedules plants employees. align

And as also million, million guidance. have $X capital planned from to expenditures $XX previously XXXX a reduction would a we stated you reduced maximum our expect, of our

XXXX. to of Houston continued improvement actions to In actions progress completed to reduction addition first material the profitability TimkenSteel COVID-XX, and in We take quarter related our closure plan. we cost facility have services previously made announced on the of in the

We expect to in going savings million annualized $X forward. approximately realize

addition, $X.X sold and equipment In quarter. machinery, in we million the inventory in excess

to times response restructured we organization efficiency to and commercial improve In February, our customers.

annual approximately in actions incremental these $X In million savings. addition to the drive operational improvements, will

implemented improve the year workforce XX% took place crisis. been the result COVID-XX TimkenSteel's of and Over half, prior cost reduction a our business. restructuring reduced to a result past of the as and and cost these by has as actions competitiveness efficiency A to a majority actions numerous of

confident previous remain rate ability calls. the in we of million Overall, our approximately run we discussed $XX deliver to in savings, which

value-added plans, customers business. investment to facility on project time remains in automotive on Ohio support components Dayton, made with our our the Turning near strategic components growth growth to in This is value-added expansion and being budget.

expect to program While dates the out production two XX half of fully ramp-up qualification out launch to pushed COVID-XX, trials of pushed we in year. launch customers days and the schedules XX proceed our due to have second program

market first rose $XX in average Busheling's to Regarding rates scrap city the began the drive of number the due to metal that in steel part supply Busheling the scrap latter movement the shutdowns decrease automotive prices of continuing one scraps production due in busheling the while index the another continue in plant of obsolete to quarter, around the XXXX. lower drop price American country. mill pricing, half to of for quarter, November the In three upward the began higher,

a continue scraps expectation rise more a substantial will that increases, scraps while is to rise obsolete Our Busheling moderate will fashion. moderate prices in more see will in

it that, who will walk Kris, Kris? over I'll you turn the numbers. through With to

Kris Westbrooks

Terry, other with good a partners. working employees their express to would and commitment engaging everyone. for while like Thanks healthy gratitude actively morning, our to our customers, and environment, I safe suppliers and to my also

In to we a half financial efficiency. Moving of second now to project the working on capital matters. improve our initiated XXXX,

quarter we we what entered as we a The higher first and of the cash be second hard inception ideal our first historical quarter timing as from by the As benefits a with work of what than of the flow million. was level entered of free cash work challenging evolved, $XX.X of company. very realized XXXX we liquidity believe this this quarter significant will since the available evidenced most

last six free over approximately $XXX the months, operations. million from In $XX in and cash cash of flow million we've generated

cash us light actions preservation the of net which first As we and will remain as shipments on cost ensuring the focused the to Terry reduction, months, accomplished market benefit income financial our coming near-term recover. mentioned, our begins serve COVID-XX, in stability EBITDA and guidance. In quarter

our XXXX of On net first million. was a quarter basis, loss GAAP $XX.X

Excluding the net certain the million adjusted was loss in quarter. $XX.X items,

Adjusted high EBITDA the quarter, in at our range. $X million guidance end of the first was

the quarter improvement net loss, of negative significant larger from EBITDA represented the reported quarter we First results fourth financial a that in XXXX.

This the end fourth or quarter drivers tons the quarter first XXXX. of in From partially were tons the higher Normal million results, adjusted of were in offset quarter the market the level shipments impact to EBITDA higher over improvement approximately lost to revenue. in end XXX,XXX mobile perspective, improvements quarter, across on-highway $XX XXXX. negative increase of XX,XXX of XX% of of approximately million. seasonal X,XXX tons of an in March customers Moving fourth COVID-XX drove shipments an were our of X% $X the by a quarter of shipments

quarter. by in and the Shipments and tons shipments The quarter first XX,XXX the of positively and seasonality in the XX,XXX XX,XXX also tons energy quarter impact our were was shipments minimal. industrial impacted energy in tons from billet quarter, were first to to on industrial COVID-XX normal

and pricing, shipments with $XX.X in impact as revenue quarter an quarter million but declined $XX.X Price mix fourth last given XXXX. the price of first below the quarter the of Lower year. quarter first million fourth compared contract impacted was XXXX, higher million to compared $X market pressures the quarter and of of Surcharge $XX.X mix. million approximately the well to EBITDA in of of XXXX negatively as billets underlying an OCTG improvement

negatively impacted well tons XXXX. lower Lower in a busheling revenue surcharge the comparison first revenue scrap to one as as index decline on of per quarter ton in a surcharge the number was ship

leverage fourth by fourth quarter benefited remained first utilization quarter, from improved of the quarter XXXX. from $X in costs XX% XX% the in approximately at with the Melt low up XXXX. primarily fixed million, Manufacturing cost was of compared but

will periods as actions Additionally, first services quarter benefit in cost maintenance inventory of the and sold. areas reduction future outside is

and expense it $XX.X offset for and debt quarter consistent and the wages a was variable the benefits reflects by substantially with as was million, of compensation in quarter and an actions. restructuring lower SG&A the increase first year relatively prior result expense bad company's

receivables of in actions. the cost closed categories, end $XXX in to all effective and quarter Moving XXXX. available first result the the the $XX.X quarter and liquidity reductions management quarter to of an us our of significant on XXXX, was liquidity, million free was enabled of generate and of improvement of and prior These $XX.X of liquidity year first inventory cash. $XX the flow benefit million the million reduction million cash of end increased total a of The actions since with payables continued at cash

Additionally, the contributed to cash during proceeds our from improved quarter liquidity. asset sales

liquidity generate months additional continue aggressively costs remaining the to conserve to remains in March Texas to at cash. ahead. actions liquidating the and take position on assets the end we reduce in sufficient, the team will focused the Our our of necessary and facility Overall, remains cash closed

noncash adjusted has loss and From service sum was a sum driven U.S. salaried perspective, remeasurement in a by lump from of XXXX. of interest It EBITDA plan the results. remeasurement $X.X million XXXX excluded of obligation first to pension pension plan our and payments company projected The of quarter costs. the recorded the exceed the assets been

plan salary Going forward a quarterly in XXXX, pension remeasure basis. U.S. our required on we to will be

quarter. slightly of March following quarter first pension was all no approximately XXXX, pension this of down approximately XX% the first in There from additional status XXXX. XX, are total $X the as plans in contributed of end million funded contributions Following remeasurements, required company the XXXX,

still April. experienced in significant economy, the it's to early duration shipments of the customer we've and in the determine on impact business Although and extent our a overall too decline COVID-XX

supplier perspective, Order bookings of supplier demand. and chain experienced have a our as in raw and a result with customer reduced downtime to material a not production supply date disruption network. in close declined From also contact we've remain our significant

cash deferred and quick decisive we've expenses with maximizing expenditures our operating taken reduce liquidity. month, action past the to available the Over and of objective

to related aggressively First, continuing schedules with from in while a manufacturing provide demand service. to COVID-XX perspective, customer customer environment production this uninterrupted downtime and align we've reduced

in utilization XX% In for remain weekly was shipments month. in support well. necessary April, the melt operating rate anticipate our as utilization tons to being in reviewed May We and are ship to Plant demand. XX,XXX low support as our melt schedules revised

will dependent automotive production schedule chain Our schedule will supply heavily heavily be by up. the when be ramps

periods, During represent diligently working team planned our costs. which approximately to operations variable our XX% is plant downtime of reduce total costs,

Second, employee May of for employee furloughs mentioned, salaried actions approximately Terry from we've an our demand-related perspective, XX% as and in April staff. implemented

and estimate will unpaid example, May employees save for salaried have week, in million. Next April the furlough. We on $X we actions approximately over XXX that furlough

as the and necessary. forward in coming to furlough will going We book order continue plans weeks adjust monitor our

and of reduced. Additionally, the In the salaries and continue save assuming team the to compensation will Directors These compensation Board leadership will of as cash reduced were conditions approximately improve. similarly base Board actions the total, $XXX,XXX, be business equity remainder cash XXXX. compensation were reevaluated reductions reductions the of team leadership and our for

June actions contributions $X.X to an of company estimated to suspend effective decision salaried our employee remainder for difficult X. is perspective, we the approximately save employee retirement from the to made XXX(k) action matching This Lastly, XXXX. million the accounts

on You Form we details can yesterday employee X-K find SEC. actions further the in with the filed that these compensation

to identified our to the now legislation most company began from option legislation security the payroll was benefit paid date that the installments we've expect is gears XXXX to equal of of deferred of CARES impact government the social We cash payroll significant and end the in to that this relief Switching $X tax part deferral at The of employees. recent and two to on million advantage for XXXX the of be and take million to payments Act. option remainder tax the April, deferral in $XX XXXX. in result the approximately

Regarding programs, we available programs and time. not that qualify the evaluate company believe the loan this do at

furlough up full eligible spending earlier our from Act. guidance. actions, by year on a reducing unemployment individuals reduction per afforded perspective, To of for of week $X the the employee are CapEx $XX XXXX a an to additional COVID-XX-related million, our CARES From now we're $XXX an maximum compensation of wrap million planned

reduction Texas run workforce of prior and attributable the the of XX% since our Previously, and in facility pension of are to of structural we to we've quantified actions. beginning these reduction and plans. savings the of in manufacturing such attributable our from half are our Over be activities implemented savings million changes to savings medical delivered purchasing in $XX rate XXXX closure business, year cost the in operations. portion retiree changes XXXX, A as

required actions these savings. the of many implemented to We've realize

are savings on of utilization. purchasing the However, dependent level activity and reasonable plant

$XX million begins expect market on the rate savings. the As to recover, deliver of to we run

current economic structure we're the in Additionally, improve evaluating restructuring environment. to further additional cost actions our currently

communicate these will details. As plans we are the finalized,

impact its this the extent the quarterly around the at and and time. COVID-XX suspended company, uncertainty on guidance providing related we've of duration Given

This the remarks prepared for we would wraps my like to call up and questions. now up open

Operator

Your Rosenfeld first Instructions] the Exane of Seth question [Operator from from line comes BNP.

is line now open. Your

Seth Rosenfeld

Good morning, thank questions, my today. for taking Two please. questions you different

bit little First, us you the period. On on with capital in of and savings. performance release can a then positive very drivers possible, with QX just give certainly, to labor the if working capital, more a regards and cost to secondly, that working strong very in regards of working and some that capital color,

the what to response off regards QX seen And you back guess more just with how to color us release low want assuming that the then currently expecting rates, a I more a secondly, sustainable the you portion staff decent much. you've year, utilization in Thank we laid efforts? on time can into you and over given these would volumes? the bit of manufacturing of is more are has for been sharply half so second got reductions also But medium the require given again understand we reinvestment temporarily the lower volumes further to that I better staff give cyclical union manufacturing term. of period? the

Terry Dunlap

Seth. Thanks, Great.

pointed fruit day in will. numerous front, areas his the there's was if Kris across business actions, of we're last the to available opportunity, as gotten inventory. So of comments, working taken We've out that every over but in the a on lot every we've you all capital, months, those on the in low-hanging plenty more working us six and

our So think is we business. sure way we run and improving there the be for to more had in the processes

been taken targets of. Some care have easier of the

– there's for and ongoing been months. work And so the now has six

think as business we'll go we difficult we're practice the into forward. opportunity and going taking changes the we we actions that have more But we have be – – So forward. certainly, to some

the manufacturing I'm can every talk tell been very and to working I cost well. to supportive I a the about personally and work that's they totally them going them of it meet constantly on United going talk on But running Secondly, doing have you week. the the and with side, operating the Steelworkers, Kris with keep we're company all let everything but we basis, and steelworkers frequent to on with nothing this one. keep

thing. COVID be and they've supportive been partners too. this better to the fully period, COVID is helpful, related the And understand incredibly whole volume Over couldn't they throughout activities

of you the support the some manufacturing pick full questions. Kris, cost union. want to So from up on

Kris Westbrooks

moves we've managed count the are made being Yes. I week. that mean head week to

changes with production capital the side, demand. on just as we're actions add we've our lot be to can bit feel we do that here little necessary like are sustainable. the been That's taking made we of And as adjusted. gets a focus demand balance that to changed working So a continue those as then

improve, to to you buy And processes the as will continues we to the then that like ultimately can customers, the through we manage and a be place in there here future. business the into benefit invest that. need us but sell will put As some feel we

Seth Rosenfeld

Thank you.

you. of sizable would rates in to achieve shipments. expecting on capital Or you perhaps then. a additional utilization into We QX cyclical follow-up Thank quite QX capital the forward one release on of QX? working working that and given expect Are working Just reduced on basis a pulled some into already? generally has color been capital

Kris Westbrooks

we could additional seen yes, Seth, as some but that environment how remains much I'm taken be all throughout first opportunities, it to there quarter. action we've optimistic as the quarter. the here demand can the on in be progresses

not going believe specifics to even but hard we're opportunities that the So work or in could, and here on as we to deliver second we really comment some are the first quarter directionally still. we much did there as quarter, in

Seth Rosenfeld

Great, thank you.

Kris Westbrooks

welcome. You’re

Operator

comes of Tyler next line Cowen. from from Your question Kenyon the

line Your is now open.

Tyler Kenyon

bit morning. Hope could like utilizations if Wondering on good more doing Hey, little comment well. what all you're a look today. you

I of XX%. that if here? and impact help shipment how think were around volume to the here quarter-to-date May could And kind and April try Kris, through into as you mentioned well understand wondering you just transgressed utilizations us

Terry Dunlap

do want grab to you Kris, that one.

Kris Westbrooks

Yes, no problem.

May as You I at demand May what production The well. in Tyler. I every of expect schedule XX% is were. as as that plans going and April outages our We're of are business indicated week our in to into environment. looking month that to pretty mention be remain comparison indicated that right, low we that to well. was small match shipments did that to at April the I had taking original necessary and low XX,XXX

industrial shut mobile some as the you very better the but automotive down. significantly were was April specifically month up was so and expect, shipments, down in that held than were energy may all Mobile those facilities whereas light, of it

gets also our back So inventory expect in consumers. production automotive shipments fashion, begin up, some and time as the and going where on we moves to that those will sold ramp to into it's and take dependent that a be how similar open it our although

Tyler Kenyon

Thanks. Perfect. it. Got

Terry Dunlap

on. just to to on add Tyler, that, Yes, add on add just to

far. the same up. biggest the we And automotive do really ramp You read impact the by about was stuff that

for really So with May. what news attention we're inventory day, the ramp customers and paying pacing it about about the like. our plans what Every new there's close is their levels and are

telling close be factory any can't we – can't aligned us with work they be to need. we staying and operations they're what harder, customers aligning and our So what

to couple the a next that of expect of months. We for be course normal business

Tyler Kenyon

these share about about what And Are some bookings? through little realize just middle quoting right automotive, restart you we've yet from the all in for sitting you're they reading customers are you upside that first May. a of now, your can to to you need been inventories on burn plants you I hearing bit your sense mean that shipments? OEMs the improvement seeing And any on in do before any expectation

Terry Dunlap

Tom, do take you want to one? that

Tom Moline

that. color morning, some on everyone. offer will I Yes. Good

that the the As result of vehicle That's on-highway March was the auto XX.X% closing. largely Kris the quarter, in rate latter plants units. sales approximately of in dropped the their quarter mobile down XX and was million that to down annualized well the assembly and The the approximately of sales alluding the was from XXXX for a led pandemic engine down million to, half rate as units. shutting market XX.X as transmission COVID-XX dealerships to OEM light

loss last Kris primarily the and of new improvements normal And been stated, seasonality increased quarter, a at up closures. approximately without ton were shipment would X,XXX plant end to volumes our have by Now in the as again, X% due to the few March that up the our volume driven the program relative actually launches. mentioned Kris XX%

and to are and the suggesting suggesting early both restarts value-add are several long supply and two about products. are the inventory in suppliers impact one of of we that Now May, seeing OEM include ramp-up product plant that span late for the to a could start activity weeks to that weeks, also and happen. gradual that range to production They would component from full tier chains

XX% units, is production down forecast is respectively, to and million and and for light relative The XX.X sales million current XXXX XXXX. vehicle that XX.X

still for startup need safe Auto Agreement approval OEMs Governor and protocols. United operational and Worker the Now

in what annualized The X.X it and bit were for sales positive forecast. were vehicle a million better pickup than Incentives, truck sold forecasted. note, On to activity light in actually efficient online was bit actually drivers annualized sales a rate. good They key better X.X was forecast rate. April a at than coming million full-size unit

to mix auto in key continue cars total participation relative sales. is be markets. Passenger our Obviously, sluggish sales to to

SUV is mainly truck, CUVs. participation Our in and

So to very pass really car our exposure declining is market modest.

from perspective, the automotive was prior good COVID-XX. in shape our market to So I mean,

increasing consumers were of be relative lower will to just an be restarts making right safely ability in volumes QX. watch buying level significantly the plant And their Our to recent see interested to forecast. we quarters, vehicles forward. The now, but how there's going in to operate have very extraordinary to certainly due and how it COVID-XX auto difficult progress, will still demand uncertainty

in to stated, And Terry and are customers stay the customers, contact to as staying are level. our close macro very as watching will And them continue we with we the alongside requirements. fulfill close to as indicators well micro there at work level material

their So doubt, when up no we be production. ramping they ready to start ready are will,

Tyler Kenyon

much. very Thanks

Operator

next line Instructions] from the comes Justin from [Operator Research. G. question Bergner Your of

Your line open. now is

Justin Bergner

Good Good Kris. morning, Terry. morning,

Terry Dunlap

morning, Good Justin

Justin Bergner

the just a delve and little CARES hought Act. start I into I'd

million XXXX. the to that XXXX, $XX and primary million. out outflows separate? effectively you from tax guys cash those are Just payroll sure understood, and $XX in you the mentioned you I outlined pushing social and make the deferral XXXX, the security benefit How $Xmillion is Are

Terry Dunlap

Kris?

Kris Westbrooks

Yes.

rein $X million would of million. $XX So kind together. It to was it

benefits million and million that gets pushed range is the of of $X end is of the end end the this and into the XXXX. the $XX high So for compensation low depending on the And year. XXXX of range, rest

Justin Bergner

you any you able see the back NOLs provision the for? you Got into you. your as Or years? been that have then of look profitable yourself per eligible don't as Act is sheet All on that something right. are And to CARES past

Kris Westbrooks

a benefit . since for us big And a spin-off, because NOL not given we our as the taxpayer been haven't of

at prior of the March. will of our high taxes impact, a there still So but end of here recapture level some And not given we grow, very that have any position. could be a NOLs

Justin Bergner

Okay. Understood.

that. quantified, numbers. year. furloughs sure of about May to from through XXX(k) savings the million $X think, I right the savings, from I you make I guess, end of the confirm and wanted cost Just additional and in just those $X you million in terms want quantified, the And the are in that suspending April to the cost

The quantify that sort for the that want you of of outlined, of you for tracking other savings there a incremental be do as the number you actions well to XXXX? savings total might sort

Kris Westbrooks

take Yes. can that Terry. I

Terry Dunlap

Yes. Go one. you want that if take to ahead,

Kris Westbrooks

Yes.

summarized XXXX the up and actions cash release, add that benefits you as $X announced the and If mentioned. here of we you items cost I complete benefits in my about it's million that we for

demand levels could to the May, a Now to it's our included June. and and that included April and estimate make adjustments as get we're continuing furlough we there, in evaluate we that about into $X million plan month. I've only

additional for the rest million But $X continues. for is it call captured of mentioned assuming two month million that months $X of incremental So savings. The $X XXX(k) every you of XXXX, furloughs, million approximately now, right $X I've that million it in estimate.

salary there will And and business improve, as that's was last that conditions the as the $XXX,XXX reductions piece reevaluated of about be well. cash

So those items are what million. up to adds $X the

typically we're didn't put that Those significant and actions fairly the as benefits the cost. production align demand to with demand, those. try taking to manufacturing reduce with Now align are on within numbers I you

Justin Bergner

you. helpful. Okay. very Thank .That’s

just of were energy Any that would expected base or sequentially, be the more quarter sort although color what first statement might badly as not made pricing on volumes forward-looking markets be means? as comment that down the You it and earlier doing were sequentially. up Is backward-looking a helpful. that was meaningfully

Terry Dunlap

want one? that grab to Yes, Tom, you

Tom Moline

heavily was Yes. focusing Thanks. spending in constrained relative quarter. were started to yes, back last up reducing the of back first Operators to in They in their market come and quarter. the the Again, the on volumes XXXX, inventories. into decent XX% energy QX, their half market our

we're spot And customers is of volumes volume macroeconomic in but again. able products, Now But by weakening environment. are up consumption off play. reduced some big increase, our petroleum-based OCTG also very impactful COVID QX additional were of in energy But the coming questioning, Most QX. factors rate we low are more that a have business in in year. been without COVID percentage-wise, last the billet the market levels largely currently And related. impacted operating pick that's to of is

there Oil in and XXX inventory $XX counts barrel to second in to level extraordinary in and recover prices macroeconomic barrel prices lower and due investments the and gas COVID-XX approximately Again, approximately exploration dropped environment, levels be a likely half. and a could the $XX not the Oil in it are to of to are be from again, but severely expected rig would making be the earlier are difficult year of forecast, in to high uncertainty approximately near are in curtailed, approximately low. go factors, oil U.S. have the is second XX% and this to forecasted term. half.

selling a more we're heat content, treat heat the Now mix, what not had what products, to we alloy – type, products expected pricing, treatment, traditional, we values closely less And than prices value products. aligned of percentage in that cautious with saw we have sector, requiring larger are the on and energy with in quarter focused as energy for heavily first they type that and influenced more requirements, pretty by are the be forecasted. particular, forecasted. a average in volume energy mix product actually were completion had those the so of those you had average I those were billets

pretty would average values environment. demand you indicative are those forward going a that lower I in expect what in saw So QX of

Justin Bergner

great detail. for Thank that you

a are to mentioned there half else? that something ago? in to of this the revenue in automotive $XX the XX envisioned referring I new on to you you think, think XX quarter programs. half Or day second contract to year, a of Were sizable Just you in lastly, I order expected as the million second the beginning deliver you delay, of referring

Terry Dunlap

And the were been quarter. last with value-add about pushed Those the out. we launches business our in they've talked

we ones but two expect, fully the pick As down. – about, day up you they're are XX, expecting talked with they're expecting XX delay. – to would plants the right the back of The

both in with talk those but point, about will, day launches. second make this those and good intact, plants in you with at bad. given back with still extreme just else But to with talking are we’ll confidentiality everything not too of one, to – not sure at We're we right which year either we'll issues every industry, half them the able not of it is think going the customers. automotive keep on nothing that's if detail, So news, the be to due

Justin Bergner

for answering you questions. my Thank

Kris Westbrooks

You’re welcome.

Terry Dunlap

Thanks, Justin.

Operator

over There are time. Beeman. will to at further call questions I the Jennifer no go turn back this ahead. Please

Jennifer Beeman

Thank you concludes you today. Thank joining much. so that so Stay the call. much us healthy, for and

Operator

today's Ladies this gentlemen, concludes Thank and conference call. for participating. you

now disconnect. may You

Metallus (MTUS) 8 May 202020 Q1 Earnings call transcript