TMST - Earnings call 3 2023

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Operator

Good morning, and welcome to TimkenSteel's Third Quarter 2023 Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to Jennifer Beeman, Director of Communications and Investor Relations. Thank you. Please go ahead.

Jennifer Beeman

to Quarter welcome Conference and morning, TimkenSteel's XXXX Third Call. Good and Beeman, for Director Jennifer Investor of I'm Communications Relations TimkenSteel.

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

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

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

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

information details earnings the to Where and included are referenced, release. equivalent non-GAAP additional reconciliations also financial GAAP its in is

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

Michael Williams

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

hard employees I'd foremost, pathways and First to chart we for their like collaborative new growth. thank our spirit as continue for work to and

and commitment results beginning manufacturing our supply resulted meeting while and to is solid on the and a focused teamwork profitability to in safety customers. commercial, chain our show of needs across our operations firm fostering strengthening Our culture are

and and Additionally, excellence culture lasting business. within manufacturing Steelworkers strategically to both our we safety. our The is pursuit while the us continue of our with teams to reinvesting create enhanced United of in repurchase shares seen collaboration we've helping never-ending a fueling

our valuable safety employees mindset us improve continued Results improvements. from safety engagement, for improve employees. help this second for from survey employee our launched awareness, safety-centric insights will and build a we survey October, In gain hazard all

is on CapEx training. good concrete encourage that safety XXXX, million and we However, safety provide it spent projects safety $X to in $X approximately million we ideas, support. In essential

a quarter. performance. our We saw the third in slight shipments and decrease in to sequential Moving sales

market in and end lower impacted a across months. we've scrap base several by surcharges encouraged, past solid experienced sectors, While continued alloys EBITDA decrease the prices all for I'm given prices in was market

quarter higher quarter. Our third the melt utilization approximately the for than XX%, previous was slightly

our October, fourth in we a utilization in average decrease rate see quarter. sequential the shutdown the melt planned Given expect in annual maintenance to

automakers were shipments demand second operations. a mobile Overall, United moment to customer products. essentially it OEM for flat manufacturing Mobile I for how Auto non-U.S.-based relatively to wanted our of impacted the the discuss U.S. quarter. strike with minimal. our to and shipments with the X/X take About quarter Workers was third impact the go

which with ship we to the were auto Additionally, in operations by strike. manufacturers Mexico, not impacted

to the During the catching past chain was up orders. still early weeks of fulfill supply the strike, due

in, in directly stoppages a programs expect XXXX. recover the and OEM quickly early we're we to affected demand remain work few strong Although involved

XX% we record products, EV-related Regarding a representing third sales had quarter increase second net from the a quarter.

and As at will quarter, a $X Ohio investment machining pace us industry growth. EV XXXX. million with offering component investment lines facility we be our late customers approved in to component had This our in allow Southwest additional X installed broaden to reminder, to manufactured a last for keep

in major the an U.S. coupled in the programs. industrial Department uptick of industrial prior to In shipments over X% expansion for high-quality base increased grades continued market, of the quarter. We of demand with our by Defense strength supply due saw supporting defense steel, sector the

quarter. defense the sector the to fourth in sales record expect We

reflects from conservative dropped the approximately declined shipments U.S. XX% rig industry's approach. on in the period. the sequential The Our as despite a energy third during an weakened. continued increase the quarter oil count second XX% in demand basis prices average quarter This

newly Vice market a pursuing identifying commitment portfolio, introduce we established Development, Lynch product are primary pleased as role. actively ongoing of to our a X our over look and Tim's support is by expanding imperatives. a to our supply Tim value to team. welcome and acquisitions enhance company's with to company. to strategic the strategic of our our align operations, to forward With management, decades, presence planning and career our We valuable In expertise Tim that broadening to chain mission Corporate extend procurement spanning contributions our President in Tim warm brings steelmaking and his extensive

have towards commercial ongoing are way and a to strong enabled about of and of administrative balance been manufacturing We process and initiatives achieving and IT XXXX. with sheet excellence, administrative with including as To $XX achieve reliability of target our our simplification target focus simplification profitability focused excellence our to improvement process we our by remain X/X areas Again, date, million company-wide the on work by systems. our continues modernizing excellence committed foundation. our manufacturing actions

cash into trust, flows. their for we service As customer for I their for customers advancing safety, remain last our we support. partnership few shareholders enter the and and profitability of thank our the through-cycle and strategic continued months on year, focused imperatives to sustainable will our suppliers drive their our

call to over would to turn the Kris. I Now like

Kristopher Westbrooks

employees company's Good collaboration delivering and these financial their focused remaining financial flow. solid results to teamwork TimkenSteel's operating joining and reflect positive strategic results, morning, and for for everyone, quarter the profitability Mike. advancing Thanks thanks another imperatives. quarter cash while third Thanks, today. and the of on all of call our

in diluted $X.X share. share. On adjusted quarter net last diluted of financial sales third million results. of the diluted $XX.X sequential with second or sales income company or quarter share. quarter loss $X.XX to net $XX.X $XXX.X was an million third basis, net $XXX.X the Adjusted million million million reported income were or the a with net or $X.XX quarter per last year's Net was million year $X.XX quarter a loss the $XX.X turning per per of a adjusted loss sales of Now million income of per share. quarter per of third second $XX.X share. million the $X.XX totaled $X.XX share. diluted $XXX.X net diluted net $X.XX loss million or Comparatively, Comparatively, net were Net $XX.X or third in income with diluted per in

adjusted in the $XX Adjusted the third of an the quarter. year, sequential market-driven were quarter raw EBITDA drivers and EBITDA. decrease increased in Partially last decrease of shutdown environment of with $XX.X the product A offsetting these in third EBITDA was higher million items the were in in sales mix. a adjusted $X.X our in the maintenance decline. EBITDA million start of the improvement adjusted planned material by quarter, million prices surcharge sequential million based and Compared annual $XX.X

downtime the shop. quarter reminder, a at included melt third As of the unplanned XXXX

by sectors third higher quarter third continue to Sales third were across the represented customers to financial quarter of details in basis. decrease fairly third quarter, in quarter, tons a quarter market, the shipments and of were Shipments of and or end Shipments quarter in third XXXX. sequential XXX,XXX quarter the industrial to compared X,XXX driven last X%. shipments was results The XX,XXX the compared the industrial the to XX% or with strengthen a third in industrial tons defense increase the XX% in sequential sequential second the of tons quarter. sector. other with year. now on shipments the quarter in totaled In second of X,XXX of steady Turning X% increase the in defense the XX% the a slight tons

in Of flat sequential a of the and from September, energy third-party XX,XXX quarter, by resulted third quarter. shipments, a end the the were TimkenSteel. quarter. quarter, or as decrease automotive approximately softened shipments customer tons third demand impact energy in tons quarter the work third enrolled, with XX% shipped second in X,XXX Through totaled shipments. essentially total melt that XX,XXX minimal net or sales XX,XXX was customers tons to stoppage our Mobile and customer of has third in producers X% on the tons finished sourced Shipments

XX% productivity. As given sequential in represented improvements expected, a internal our this melt of decrease

Net the lower million net third surcharge average material a quarter XX% X% in of decrease decreased per decline sequentially. ton sales in due result a raw scrap The in sales prices. and alloy primarily $XXX.X market-driven as to is of

decline to were sales. based in Partially shipments these contributed mix. lower offsetting prices slightly sales Additionally, product net higher and favorable the items

utilization quarter. operations. finishing third in as by Melt planned XX% the manufacturing. quarter annual was in and XX% with third second in compared to shutdown costs million the $X.X began sequentially quarter piercing now we increased the Manufacturing rolling, Turning maintenance the our at

the income a to taxes. quarter. the in tax The decline gears company's basis year-to-date and of taxes in to in quarter, anticipate rate September. Switching fourth we on end third was XX% were XX% million the effective quarter $X.X the and Cash taxes cash through third

cash Moving and on to liquidity. flow

of end expenditures quarter, quarter During operational operating quarter, through million the quarterly and in by $XX.X $XX.X operating company's in safety. million. cash Year-to-date, the flow. Capital was third various operating driven to $XX.X cash net flow growth marks cash This income. third consecutive efficiency, improvements investments flow million, the positive generating XXth the was included totaled and drive September,

In to anticipates CapEx cost million, XXX,XXX company a approximately the at with consistent previous third million share year quarter, the repurchase the of From the bought $X.X of approximately guidance. $XX bring company common perspective, quarter million. total $XX fourth total the to full back shares a during

September and repurchased the XXXX company shares In convertible XX, total, quarter outstanding XXXX, the share program. of repurchase $XX.X common end repurchases to XXXX the early in million. through share significant fourth the have $XX.X of September of the its XXXX. of last has cost million on compared Since a As year had note company in total inception XX.X% plus the the resulted at repurchases remaining program million diluted shares the reduction a X.X of

quarter million equivalents total $X was Interest cash by XXXX. of million and XX, and $XXX.X cash the $X.X was company's company's as year-to-date. nearly balance generated in the cash The September $XXX.X totaled million million income and liquidity

we to returning expected to allocation and profitable us execute flow the balance growth, we strength share to cash forward, on capital expect shareholders maintaining to sheet provide our combined through of This includes repurchases. and sheet, in proceed our positive investing balance through-cycle As strong continue strategy. capital with continued operating opportunity a the profitability

decrease and are a to From work as anticipated surcharge ton reduction Busheling remain quarter volatility the is in potential to ton to due and the Base fourth from a Scrap stoppages normal which impacts decline now revenue in quarter expected revenue expected perspective, fourth the #X restarts. surcharge monthly ton in The September, per surcharges. sequentially to of subsequent Turning result seasonality Index price outlook. is is sequentially a automotive per strong per lower. the expected commercial shipments sales while in be to

quarter third completed a Operationally, planned were shutdown fourth shop, melt sequentially maintenance which Costs than shutdown approximately melt at of the as shutdown planned result this the October. maintenance to the in quarter, was annual the utilization quarter in higher $X fourth associated the decrease is slightly in annual costs. expected maintenance with million

to plan strong XXXX. we operating balance the Additionally, melt for to fourth demand, with around quarter cost and the to set manage holidays inventory schedule a further reduce current up start

elements, these sequentially. flow anticipates quarter is operating remain cash to company positive, the decline while to fourth adjusted expected Given EBITDA

together deliver for solid wrap again culture. employees your To to a financial of our appreciate now to results up, to our to TimkenSteel. call strengthen We would who as safety thanks I the interest questions. all continuing team in like work open while

Operator

[Operator comes Instructions] John & from Company. first from Franzreb question Sidoti Our

John Franzreb

Just Did playing I'd kind color results? to of fourth on comments the is how of your it November? more with of Or to out? the anticipating are impact it like you impact strike. UAW quarter October's start kind

Michael Williams

Sure, John.

during in significant That's months October they yes, still and of and this have quarter. strike. So see ramp rest versus the And the quickly a the up we they a had impact question how pull prior we strong how wait through also more mark. to much

John Franzreb

to as going no that's you Okay. giving And color play then how out?

Michael Williams

to that Well, the don't they've of we kind demand what and plants the be but give restarting know are us going requirements schedule what is, basically, just yet. are what

John Franzreb

of out you truck is impact are Mack you? curiosity, won't to that exposed UAW that the strike? And Okay. Or something

Michael Williams

anything supply I perspective but mean impacted. our I'm Not significant be possibly there I sales don't -- that some think somewhere aware chain, the would from of. could in be

John Franzreb

to the about to there sequential question then how side, in are industrial that my changed driving business that you can more, Or is a Good. you're X the improvement And for? fourth but the ago, doing that original looking Fair enough. it talk from months excellent, the that business defense that are quarter is the well? parts of talking shift going sequential bit on I'm little profile is side increase other that's -- you're entirely is

Michael Williams

their the pulling to predominantly sector That's defense that's hard supply restock chain.

John Franzreb

remain Would seasonality? Okay. And you fourth it. to volumes would is the be Got at in the the the weaker quarter? that sequentially to expect down. it energy count on due you side, to kind Or this rig you threshold touched energy expect on of

Michael Williams

our the the We've with I perspective, think days, -- from be over pretty couple very much XX to I going think flat energy disciplined rigs QX, down added, I demand. the a their last it's of in being capital. but working think, maybe to they're seen

Operator

question comes from KeyBanc. Gibbs next Our from Philip

Philip Gibbs

Just on a the to the about on on Do wanted you role targets. on comments call looking you made touch gentleman the a of front at can share terms of in you having strategy? or because you little an acquisitive you very think a what just to you guys to haven't This pivot already been have the appears been recently. of broader be augmentation a bit acquisition doing

there could you helpful. be add anything So would

Michael Williams

a for Sure. years I been going couple now. of mean, we've this transformation process through

is and focus strategic certain the kind capabilities gear expansion. product totally markets, reaching fact targeted set. identify I looking approach revamped up think external opportunities topic. discussion quarters in to commercial for be the point over strategic imperatives, more team a color that wanted our We next footprint, that just aggressively We've of to and There'll start have our we need Board this beefed to come shifted several and balance strong which our our for more markets align be fifth skill sheet. on overall various we evolution. into some with the we're with we're that a our But as to our to solid going And growth manufacturing around end

Philip Gibbs

defense spoke $XX is as And making? some relates million, pricing your second. to third pickup quarter somewhere your it maybe you're to and the I $XX and EBITDA in versus related from pickup filing much think the mix bridge mix, of the to the sequential and around then of million that How in comments pricing

Michael Williams

it growth of is products related defense-related amount manufacture. we in demand the significant A to that

in However, also the industrial we've alloy a sector. seen richer as mix well

Philip Gibbs

auto, Is big pickup and mix then sort all is markets, of was And and obviously there of was quarters a sort there of a because that energy, notable. industrial change your that across over of couple a there the step all next that, across will in really was unique? target normalize a bit the pricing -- bit of in any really, your quarter

Michael Williams

-- of big agreements, caught forward. Yes. influencer pricing richer up sector pricing QX, There and one those but the will annual that are the was was was solid besides in retroactive going That that's to some mix the that alloy the and continue product. -- mix of tied defense market

Philip Gibbs

Okay.

or some So on last issues year? maybe that some catch-up were backlogged from operational pricing the orders of

Michael Williams

got would up more quarters. went I that of it's QX. retroactive a pricing back say Yes. They caught -- couple in

Philip Gibbs

compare consumables, anything the that, then Or notable on lastly, energy like be could that anything conversion And side alloys, does cost changing? how it Great. that's last between year? to

Michael Williams

XXXX? mean for You

Philip Gibbs

last year? terms in to compares how and what maybe of at in of just mean I trends, present you've that seen terms

Michael Williams

Yes.

the requirements, contracts. contracts it I gas, energy be annual most or think and longer-term whether of electricity or our consumables

is beginning think perspective from of progress we're this I remainder contracts pricing those negotiation supply of to of flat So the And XXXX. our negotiating for the the in year. -- that

early too going of the know to out, but to tell you that's year. probably So how the by play we'll end

Operator

from [Operator Capital Instructions] from Our question Stonegate David Markets. comes Storms next

Unknown Analyst

Dave. This for is in John stepping

and quarter it's supposed XX% in you the had QX. in utilization mentioned was decrease So to

expectations a So reasonable relative for to are XX% XXXX, levels, expectation? what your historical was reaching

Michael Williams

mean there our We QX. have in target I average quarter. Yes. that's would per been

down of our we at malfunction shop. had However, of we days for to an environmental couple melt had a and be system that repair

slightly is we've -- have our target And our for case XXXX. if why been you reasons QX. above wasn't for XX%, that lower. that definitely So the will basically And the QX at given we would be

Unknown Analyst

which improvements Got in it. QX, structural, Very of cost helpful. which that discretionary... them remain And then ones are are

Michael Williams

purchases, But look purchases at we mean, our our focused structural improvements. start those be we we've year and manpower, look I cost material through the see A outside most during Well, remainder at we'll are XXXX. things what cost productivity, and number improvements were when our for quality, energy and of we improvements vary. implemented look agreements to yield the raw going arrangements been at to all supply can our structural that's And investments the of outage, that of this year full those and of are and on. of those

Operator

Our next from Sidoti. question comes from Franzreb John

John Franzreb

Just a couple of quick follow-ups.

year? putting the kind Firstly, how at XXXX you of know ballpark looks the got you're in XXXX? equipment year, additional I what like but that can capital does you expenditure the next for outlook end change the of of CapEx next versus spend in piece

Michael Williams

process For do probably have planning that next a John, year, we'll and Board. we'll through the then we're And mid-December, with the now. in right discussion

time, able for at But don't this want make it. there's more year-end, at significantly at this, be I a don't to say though. anything would I that CapEx guess clarity to much XXXX. that I think in right only would this -- public. time the It anyways. I the on increase So don't planning would be the we'll give now

John Franzreb

it's fourth regarding the to of past the year, of how year either volatile on rate, full And finish kind quarter, Okay. one quarters. been for Any you're helpful. tax be would the thoughts or couple going

Michael Williams

that Kris, take want you one? to do

Kristopher Westbrooks

Thanks, John. yes. Sure,

of rate higher rate Looking around the that costs experienced nondeductible we'd these driving of year. year-to-date XX% where at The some are end that the we things be that in are is for targeting earlier year. the the

I think nondeductible should So it absent moderate those as we next into get year, items.

John Franzreb

And just lastly allocation. capital on

cash in all? and M&A, being shares to light Do little potentially more to -- you talk plans contextualize in maybe of continue aggressive at Can in just so fourth forward? quarter? bit Especially excess expect you buying rather been aggressively. do the You've so a about back

Kristopher Westbrooks

bought we're the in date. XX,XXX about the month plan shares, filing through around they'll go in October. out put we back And putting month $X place buybacks in now of October, just So a in the new of I million queue believe, of next our we

I'm about approach we we the but those future, being more in So as going not February, adequately like areas. prudent our But reported that. speak managing do in and always capital cash to come thinking to to all year-end, working we're definitely we managing specifically as

Operator

no I'd call [Operator to Instructions] over queue. for We turn questions back the in remarks. further like Jennifer Beeman have closing to

Jennifer Beeman

that concludes us you and all today, Thank for our call. joining

Operator

call. today's Thank This conference concludes for participation. you your

may You disconnect. now

Metallus (MTUS) 3 Nov 232023 Q3 Earnings call transcript