Earnings call transcript Q2 2023

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Operator

Good morning. My name is Chris, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the TimkenSteel Corporation Q2 2023 Earnings Call. [Operator Instructions] After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

Director and Beeman, Relations. Jennifer you, of Investor Communications Thank

You may begin.

Jennifer Beeman

for welcome and of quarter Relations to XXXX morning, Communications conference Investor Director second Beeman, TimkenSteel’s Good Jennifer call. and TimkenSteel. I’m

Williams, President me Westbrooks, Vice and Raketich, and President Chief is Kevin Joining Financial and Vice and Executive Officer; today Chief Executive Executive Officer; Chief Commercial Kris Mike President Officer.

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

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

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

I’d that, call over turn like the Mike? to Mike. to With

Michael Williams

everyone, today. for and you joining thank us morning, Good

business flow thank generated to during our remains second sheet. allowing of us balance like strong, on sequential Because improvement invest while realized we quarter. and deploy hard in positive the to focus maintaining shipments and allocation profitability. strategy, growth It’s trend for the their employees healthy dedication consistent momentum operating to worth noting to I’d our that cash a our in capital First, strategically TimkenSteel. work and and of productivity, enhancing efforts, these safety continued ongoing their positive company unwavering our Thanks the

the rooted anyone. machine an we foster we and to lockout/tagout employees, over-trained the guarding, in throughout comprehensive safety, or organization. bolstering alongside focused As we remain When it progress never to on journey over-communicate our safety of initiatives comes we programs a of our believe training fencing can on array culture our deeply

risks. while safety job effective industry been map and enhancing or process, One we of job to responsibilities proactive endeavor analysis of potential likelihood and our each these reducing with ultimately or proven steps, the this sense mitigate strategizing training. readiness, notable injuries. This confidence, has identifying individual empowers to out accidents carry hazards awareness Through our into measures task a their approach heightened team

have programs underscore safety, To the investments our we through $X and This $X our in as commitment, half approximately XXXX. commitment of training in of to various XXXX. approximately we safety have million invested is allocated for safety first part larger million allocation other

quarter of growth we second to solid net pricing. sequential our achieved in by sales customer performance, and Turning XX%, demand driven base

these improved remain anticipated, results translated this forward quarters. dedicated momentum delivering on upcoming to and We our profitability. commitments As look the in into sustaining to

XX%. impact was second maintenance the anticipated, approximately for melt quarter of As downtime utilization furnace the few rate our the days a proactively of on transformer. complete planned included This to

a in our continued the We encouraged significant are electric is products and base represents opportunity production, vehicle upswing positive grew for areas. by EV hybrid targeted in promising us. trends Particularly year-over-year. that our growth well company’s in bode related by the which for Notably, XX% macroeconomic sales our ongoing

EVs XX been customers, for our approximately We component from market strong parts various awarded indicating have presence. essential

persist our customers. will strengthen momentum continue with this to we that anticipate foster partnerships We valuable and even as

to and electric with we internal to will to is EV projected continue future. grow and Currently, investment combustion to X% us the This the X portfolio approximately growth. manufactured our investment customers at for late machining Given manufactured installed Ohio in recently our components facility trend, we that million to the will be EV versus in vehicle parts, allow keep of anticipate pace mix the mobile components in lines additional market component XXXX. broaden southwest approved our $X components attributed

In mobile supply chain to see in general, quarter an the continued second the industry issues. easing of we experienced steady shipments as

our who staying work suppliers are material we to However, continue customers close shortages and labor and to through issues. raw

products. Moving to our industrial

expansion particularly of Defense prior from the shipments in U.S. the compared We second major with by our are mining Department of base, supply industrial and sectors. support the quarter, in strength increased X% of programs. benefiting reflecting quarter, industrial the In defense

quarter shipments Our demand activity. energy slowed on second drilling have Concerns a sequential flat for in the were weakening relatively basis.

However, inventories and for demand. remain low forecasted relatively current

[ph] and profitability our XXXX. with excellence, companywide million strong our $XX achieve work manufacturing by simplification to and a foundation. commercial We target initiatives balance excellence, improvement remain of our focus administrative our on continues process committed as to reliability Again, and actions sheet

look ongoing focus positive cash an drive imperatives of advancing customer half excellence, to with through our our into continuing momentum on cycle second strategic XXXX to and and forward I flows. manufacturing sustainable service profitability safety, the

our I partnership for continued trust, shareholders thank our their suppliers their their customers support. for and for our

Kris. Now, the I’d to over turn to like call

Kristopher Westbrooks

everyone, today. morning, for joining thanks the Good Mike. Thanks, and call

in the quarter sequential in with melt profitability shipments flow. results cash financial TimkenSteel’s second expected, As included operating utilization, combined and increases positive

company’s performance outlook. We’re and the by encouraged this

$X.XX results, to $X.XX quarter of million, or million net income $X.XX share. second or Comparatively, share. diluted or million of of sales diluted Turning were net net per sales first XXXX, sequential last $XXX.X per with financial $XXX.X diluted income with million, in quarter net totaled were $XX.X $XX.X second the $XXX.X share. quarter per income with year’s sales million $XX.X of million, Net net

diluted the $X.XX per net quarter company $X.XX adjusted of was in million, $XX.X million, share. million, year quarter the income $X.XX the share. adjusted income $XX.X net second last basis, was first the or reported or Adjusted income share. diluted second Comparatively, per quarter net in diluted or an per On $XX.X

adjusted EBITDA in the EBITDA decreased year, increase a last an of was XX% increase by environment, prices million in adjusted on surcharge higher compared second $XX.X record $XX.X $XX.X increased by EBITDA second from base in quarter, with improvement driven the material shipments $XX.X first the million This with in was EBITDA million quarter. the Adjusted in raw quarter combined sequential sales million the quarter. adjusted

environment, in This shipments, year-over-year adjusted in levels material quarter costs our and of the raw the goods pension the was Higher decrease decline also decline last finished a peak as reflective given surcharge manufacturing which to record quarter the during from contributed XXXX. EBITDA well position was second of inventory at market lower year. as of second

second and the first the the XXXX company to recoveries excluded second of downtime million insurance last half been These adjusted $X.X XXXX, in of from of During quarters and million, EBITDA. year related recoveries and respectively. $X.X have unplanned the had

an a compared quarter to financial tons, X,XXX market, the XXX,XXX demand totaled shipments In of of the X%, the were now the second industrial of in XX,XXX the Shipments tons or XXXX. increase quarter. results first second the Turning or strong sequential industrial sequential details of in to industrial the of in quarter, steady sequential quarter, mining shipments tons, was in supported demand equipment end tons increase increase X%. inventory sectors a as X,XXX shipments in wide by driving was products. the finished for range related defense in The such as an well increase improving as position, across goods used heavy

demand XX% XXX a in second in the XX,XXX sequential mobile market of portfolio quarter XX,XXX sequential customer second point energy quarter, represented inventories. tons tons, quarter, customers the first Mobile of the X and X%. a Shipments replenish planned. second decrease Mobile slight decrease were quarter, the totaled to to XXX or Shipments customers from total reduction in tons, the percentage a in support as to the X%. hard or continue tons end of shipments pull

then producers XX,XXX sourced Of approximately and melt our from third-party TimkenSteel. by were total tons second rolled, ship quarter and shipped shipments finished

shipments in our sequential improvements the third-party Given in melt in productivity, anticipate decrease quarter. of we third melt a

million sales shipments. base sequential sales Net sales prices and increase quarter the of driven net by was The in second increased sequentially. $XXX.X XX% higher in

scrap sales contributing markets a in to a material by $XXX increased and in per quarter market increase our was in average ton, net end the comparison average the X% XXXX Additionally, XX% of in increase result alloy prices. Base across or approximately average. the on driven as second to year prices surcharge per ton sales full raw higher

manufacturing. Turning to

of the was second in inventory compared XX% sold. As $X.X being quarter, recognized second costs a as by in costs result with sequentially first plant the anticipated, the was increased million higher as quarter. first melt utilization quarter Manufacturing in XX% quarter

forward planned the of pulled permitted. the work second half quarter year shutdown million we second from into annual operating schedule Additionally, $X.X the of the as

income rate quarter. the cash time, effective perspective, expects of expenses. The income effective half of primarily by rate million XXXX to company this was in quarter we $XX gears the and tax From higher-than-expected be company’s taxes driven spent taxes. rate XX% second a the approximately non-deductible the for in tax XX%. to for Switching effective This tax the the was the approximately first At taxes second on XX% year. remainder

liquidity. cash to on Moving flow and

net During recoveries, the capital a flow company’s marks quarter, by was offset generating partially requirements. second XXth working flow. income the million, insurance fund operating cash quarter, driven of consecutive and use $XX.X by operating This cash positive cash to quarterly

the totaled guidance. $X.X X includes million quarter. forecasts as machining in forecast approximately finishing previous The for expenditures automated approved million second the recently to new component in million investments lines, as CapEx quarter. manufactured discussed increase XXXX, an now $XX well CapEx The Capital be down and $XX company from grinding higher last payments

a $XX.X perspective, second the the of common quarter cost during at repurchased XXX,XXX shares From company total share repurchase a million.

inception million remaining the of on the X.X share As shares early of through program. $XX end million. last company of the program million the XXXX, total XX, of $XX.X its June a year Since at had repurchased we June cost repurchase

common total significant convertible in approximately company’s outstanding reduction June these fourth XXXX. quarter and XX, a XXXX the resulted diluted equivalents liquidity $XXX.X compared totaled cash total, XX.X% repurchases million and share The XXXX XXXX. and of was In million the have of $XXX with cash repurchases’ in as plus note shares

on capital and business provide the progress capital strategy. balance in This strength investing we expect of to to includes profitable to forward, cash the our and shareholders. a to continue positive sheet, sheet, allocation outlook opportunity As flow we growth, strong maintaining our returning execute generation, balance consistent us

price with utilization outlook. quarter. changes evidenced steady in sales supported demand third anticipated product orders booking by by shipments the Base remain year, fluctuations of commercial third per the increase the Turning sequentially to markets, Operationally, strong modestly now From across driven to to ton in perspective, to a expected the remainder for into is expected quarter. quarter currently mix. is fourth melt as the end increase, our are by

third spend for quarter. for in maintenance second in the and half Additionally, the million. of two-thirds time, an cost planned shop spend quarter, with remaining we’re we’re shutdown completing the of At melt the process with annual year, fourth remaining the fourth quarter shutdown $XX the the expected of approximately the of the in in planning one-third our of maintenance the early this

to remain flow to of and third EBITDA XXXX. adjusted elements, quarter expects these strong operating Given in the the company be positive cash

To of the to wrap our progress solid deliver a in and up, and of help future. appreciate top thanks TimkenSteel our interest in sharing basis We to mind on all company look second quarter. your daily safety who keep forward employees continued the a

the questions. for We’d open now call like to

Operator

The you. Co. from first John Thank with [Operator Instructions] question & Franzreb Sidoti is

Your line open. is

John Franzreb

everyone, morning, for quarter. and on thanks Good a questions good the and congratulations taking

Michael Williams

John. morning, Good

John Franzreb

I’d versus I seen, half that like production about versus seem the the to seem business. tick-up outlook kind second of volatile. seeing And, of in impressed quarter, say, apply like be mining. industrial We you year. the could ago? that demand of growth half? months of also curious to second called would first we’ve there profile and It what kind on Are rates what I’m changes start any with was lot you in a to the the the guess, in pretty the I mobile three the out half defense be the demand the could in in that looks profile.

Michael Williams

Sure, John.

increases come we sales the would think, mobile. expect industrial and in around increases the part sector. going is defense some to area modest the So, I see modest or in think, would industrial, to larger profile But, our I be that in particularly

be to quarter-over-quarter. think, I going fairly energy is So, flat

some see the potential OEMs. the sales to the rates automotive tied demand increased we may increase, as rates and to continue So UAW with work stoppage also build

going over closely next the very couple to we’re that So watch and see of that months. how develops

John Franzreb

your on an kind ability customer new Fair been enough. And business? about profile update track can little I of growth know you talk bit part to captures. new of the that’s a

Michael Williams

in and a Yeah, new captures. there’s customers on I had customer need. what But I we’ve whole that mean, always lot don’t come depending I they requirements mean, of that know out product we OEMs EV participate the what in. platforms automotive solid in informed continue see on we manufacture. to by uplifts We’ve we is growth of several products EV the various that been that

the solid and that mining demand continues defense we produce increase to in for the the continue quarter. space, expect expect in to be to we products We pretty industrial then third

John Franzreb

And coming utilization it. of driving the the what’s lack in the Got quarter, third-party changes of of producers that?

Michael Williams

predominant Well, is I that would increasing. say our thing utilization the melt is

you So are cheaper manufacture it. understand, procure can our as costs to to than internal is it

to There expect only utilization margin component ramp as well. is to up see melt, second we third-party. improvement we third-party apply So for there as We our own and our financial makes it continue versus use sales a can our melt also where sense. melt

to for So on sure projects because sense get us. that little do trial out with right bit it now. the we’re product to melt. diversification positive just those very make into some need We I’m are so. work details makes do But in to great not on maybe there’s positive stages working to could financially third-party some going be opportunities a that to very those,

John Franzreb

one And into then it. I’ll get last back Got queue. question,

looks the looking about little your material spread X than thought Can bit a little for you the least months at. a at more a On going third was expectations quarter? talk like raw I headwind was than maybe that it more into bit we ago, of

Michael Williams

mean, from again, are prices scrap somewhat, times, change very They at I Yeah. volatile. month-to-month.

from become standpoint, it little So a a forecasting difficult. can

compression QX. expect we further do on in spread the However,

John Franzreb

get I’ll Thanks, back Great. guys. queue. into

Michael Williams

John. Thanks,

Operator

from [Operator Stonegate Storms Instructions] is The question Capital next Markets. Dave with

open. is line Your

Unidentified Analyst

my Hi, Dave stepping everyone. for here. in Thanks for taking John questions.

Michael Williams

Okay.

Unidentified Analyst

And QX, is XX% touched over it average what melt we I there? still to QX could mark take reasonable? XX% guess get on see you an would steps utilization, in that

Michael Williams

reasonable, that a pretty think XX% in mean, quarter we’re the I good the I somewhat XX% off is to to for start already.

over from quarter QX. X-month in positive have we’re XX% our improvement the We completed, and seeing

Kristopher Westbrooks

that’ll you QX, be into of to we down days; our XX,XXX tons when melt. be about John, do XX for about we’re planned have so expecting get downtime,

just rate trend utilization down So I that in would on to typical expect schedule. the QX based annual

Unidentified Analyst

new forward? future? Will it. you open being do have machine How with the And lines helpful. additional sometime X provide or you the the additional Got All support going Very do see in they’ll color? expect right. any demand lines, can you they increasing enough,

Michael Williams

Yeah, several investment manufacture EV in EV those increase. by specifically market. been lines for the at their directed that that the is we the components is We’ve to OEMs so demand informed going

this customers. what to do make with investment. aligning forward, we opportunity with the sure our demand. for we capability we make going we just demand So we’re with our as customers see close customers the to will increased support And our – stay our We’ll appropriate investments

Kristopher Westbrooks

expect commences incremental John it’s to a from timing perspective, that, do be going from add those late to once we on to revenue EBITDA assets. And investments. XXXX production likely and modest those

Unidentified Analyst

you taking it. for Thank my Got questions. Right.

Michael Williams

Thanks.

Kristopher Westbrooks

Thanks, John.

Operator

presenters turn have it remarks. at We time. questions no I’ll the closing further to back for this any

Jennifer Beeman

updating Thanks forward I and Thank to everyone think look next our that concludes today. quarter. you. call for we you joining

Operator

This call. participating. Thank conference for you concludes today’s

You may disconnect. now

Metallus (MTUS) 4 Aug 232023 Q2 Earnings call transcript