Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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Income Statement [Abstract] | ||||
Net sales | $ 205.9 | $ 274.2 | $ 619.5 | $ 981.9 |
Cost of products sold | 208.3 | 276.8 | 618.1 | 941.3 |
Gross Profit | (2.4) | (2.6) | 1.4 | 40.6 |
Selling, general and administrative expenses | 17.9 | 21.4 | 58.1 | 64.9 |
Restructuring charges | 0.7 | 1.6 | 3.6 | |
Impairment charges and loss (gain) on sale or asset disposals | 0.2 | 0.1 | (3.0) | 1.9 |
Interest expense | 3.0 | 3.6 | 9.2 | 12.0 |
Other expense (income), net | (10.6) | (5.2) | (16.0) | (8.1) |
Income (Loss) Before Income Taxes | (13.6) | (22.5) | (48.5) | (33.7) |
Provision (benefit) for income taxes | 0.3 | (5.5) | 0.6 | (8.3) |
Net Income (Loss) | $ (13.9) | $ (17.0) | $ (49.1) | $ (25.4) |
Per Share Data: | ||||
Basic earnings (loss) per share | $ (0.31) | $ (0.38) | $ (1.09) | $ (0.57) |
Diluted earnings (loss) per share | $ (0.31) | $ (0.38) | $ (1.09) | $ (0.57) |
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (13.9) | $ (17.0) | $ (49.1) | $ (25.4) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | 1.4 | (1.0) | (0.3) | (1.2) |
Pension and postretirement liability adjustments | (1.7) | (6.8) | (4.2) | 59.6 |
Other comprehensive income (loss), net of tax | (0.3) | (7.8) | (4.5) | 58.4 |
Comprehensive Income (Loss), net of tax | $ (14.2) | $ (24.8) | $ (53.6) | $ 33.0 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2020 |
Dec. 31, 2019 |
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Statement Of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 1.6 | $ 1.5 |
Preferred shares, authorized (in shares) | 10,000,000.0 | 10,000,000.0 |
Preferred shares, issued (in shares) | 0 | 0 |
Common shares, authorized (in shares) | 200,000,000.0 | 200,000,000.0 |
Common shares, issued (in shares) | 45,700,000 | 45,700,000 |
Treasury shares (in shares) | 700,000 | 900,000 |
Basis of Presentation |
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Organization Consolidation And Presentation Of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation |
Note 1 - Basis of Presentation The accompanying 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) 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 Consolidated Financial Statements and Notes included in its Annual Report on Form 10-K for the year ended December 31, 2019. Customer Receivables The Company’s accounts receivables arise from sales to customers across all end markets. Historically, TimkenSteel’s allowance for doubtful accounts write-offs have been immaterial. The allowance for doubtful account reserve has been established using qualitative and quantitative methods. In general, account balances greater than one year of age or sent to third party collection are fully reserved. Account balances for customers that are viewed as higher risk are also analyzed for a reserve. In addition to these methods, the allowance for doubtful accounts in 2020 was adjusted for forward looking uncollectible balances, primarily in the energy and automotive end markets. The amount recorded was based on the Company’s assessment of the risk presented to customers in these end markets as a result of the COVID-19 pandemic as well as geo-political factors facing the energy end market. Change in Accounting Principle During the fourth quarter of 2019, TimkenSteel elected to change its method for valuing its inventories that previously used the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. The Company believes that the FIFO method is preferable as it improves comparability with its peers, more closely resembles the physical flow of its inventory and aligns with how the Company internally manages the business. The effects of the change in accounting principle from LIFO to FIFO were retrospectively applied. As a result of the retrospective application of the change in accounting principle, certain financial statement line items in the Company’s consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the three and nine months ended September 30, 2019 were adjusted as necessary. For further information, refer to TimkenSteel’s audited Consolidated Financial Statements and Notes included in its Annual Report on Form 10-K for the year ended December 31, 2019. The following tables reflect the impact to the financial statement line items as a result of the change in accounting principle for the prior periods presented in the accompanying financial statements (dollars in millions, except per share data):
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Recent Accounting Pronouncements |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements |
Note 2 - Recent Accounting Pronouncements Adoption of New Accounting Standards The Company adopted the following Accounting Standard Updates (ASU) in the first quarter of 2020, all of which were effective as of January 1, 2020, except ASU 2020-04, which became effective upon issuance on March 12, 2020. 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.
Accounting Standards Issued But Not Yet Adopted The Company has considered the recent ASUs issued by the Financial Accounting Standards Board summarized below:
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Revenue Recognition |
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Revenue From Contract With Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition |
Note 3 - Revenue Recognition The following table provides the major sources of revenue by end-market sector for the three and nine months ended September 30, 2020 and 2019:
(1) “Other” sales by end-market sector includes the Company’s scrap and oil country tubular goods (OCTG) billet sales. The following table provides the major sources of revenue by product type for the three and nine months ended September 30, 2020 and 2019:
(2) “Other” sales by product type includes the Company’s scrap sales.
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Restructuring Charges |
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Restructuring And Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Restructuring Charges |
Note 4 - Restructuring Charges During 2019 and throughout 2020, TimkenSteel made organizational changes to enhance profitable and sustainable growth. These company-wide actions included the restructuring of its business support functions, the reduction of management layers throughout the organization, the closure of the TimkenSteel Material Services (TMS) facility in Houston, Texas and other domestic and international actions to further improve the Company’s overall cost structure. Through these restructuring efforts, to date the Company has eliminated approximately 210 salaried positions and recognized restructuring charges of $10.2 million, primarily consisting of severance and employee-related benefits. Approximately 50 of these positions were eliminated in 2020. TimkenSteel recorded reserves for such restructuring charges as other current liabilities on the Consolidated Balance Sheets. The reserve balance at September 30, 2020 is expected to be substantially used in the next twelve months. The following is a summary of the restructuring reserve for the nine months ended September 30, 2020 and 2019:
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Disposition of Non-Core Assets |
9 Months Ended |
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Sep. 30, 2020 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Disposition of Non-Core Assets |
Note 5 - Disposition of Non-Core Assets During the first quarter of 2020, management completed its previously announced plan to close the Company’s TMS facility in Houston and initiated a plan to market and sell the assets at the facility. Accelerated depreciation and amortization of $1.6 million was recorded in the first quarter to reduce the net book value of the machinery and equipment to its estimated fair value. Subsequent to the closure, certain assets were sold and a gain on sale of $0.5 million and $4.7 million was recognized for the three and nine months ended September 30, 2020, respectively. At September 30, 2020, the remaining associated machinery and equipment, with a net book value of $1.6 million, was classified as held for sale on the Consolidated Balance Sheet. In October 2020, a portion of the machinery and equipment was sold for $0.3 million. The land and buildings associated with TMS were not classified as held for sale, as they were not considered available for immediate sale in their present condition. While the Company began selling the inventory associated with TMS in the first quarter of 2020 at prices that were in line with the net realizable value of the inventory established in the fourth quarter of 2019, excess inventory related to our energy end-market sector resulted in an additional reserve of approximately $3.1 million being recorded in the second quarter of 2020. The excess inventory is the result of continued weakness in this end-market sector, as well as recent closures of several distributors that were holding considerable amounts of similar inventory.
In the third quarter of 2020, TimkenSteel informed customers that as of December 31, 2020 the Company will discontinue the commercial offering of specific small-diameter seamless mechanical tubing product offerings. As a result, the Company recognized accelerated depreciation of $0.4 million in the third quarter on the machinery and equipment used in the manufacturing of these specific products. Additional accelerated depreciation of $1.2 million will be recognized in both the fourth quarter of 2020 and the first quarter of 2021 in alignment with the ramp down of this machinery and equipment. |
Other Expense (Income), Net |
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Other Income And Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Expense (Income), Net |
Note 6 – Other Expense (Income), net The following table provides the components of other expense (income), net for the three and nine months ended September 30, 2020 and 2019:
Non-service benefit income is derived from the Company’s pension and other postretirement plans. The Company’s expected return on assets has exceeded the interest cost component, resulting in income for the three and nine months ended September 30, 2020 and 2019. The TimkenSteel Corporation Retirement Plan (Salaried Plan) has a provision that permits employees to elect to receive their pension benefits in a lump sum. In the first quarter of 2020, the cumulative cost of all lump sum payments was projected to exceed the sum of the service cost 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 2020, which resulted in a non-cash (gain) loss from remeasurement of ($4.1) million and $3.5 million for the three and nine months ended September 30, 2020, respectively. For more details on the remeasurement, refer to “Note 11 - Retirement and Postretirement Plans”. |
Income Tax Provision |
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Income Tax Provision |
Note 7 - Income Tax Provision TimkenSteel’s provision 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.
In light of TimkenSteel’s operating performance in the U.S. and current industry conditions, the Company assessed its U.S. deferred tax assets and concluded, based upon all available evidence, that it was more likely than not that it would not realize the assets. As a result, the Company maintains 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. 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 majority of TimkenSteel’s income taxes are derived from foreign operations. During the third quarter, TimkenSteel (Shanghai) Corporation Limited declared a dividend of $5.1 million to TimkenSteel. Foreign withholding taxes paid on this repatriation of previous profits were $0.5 million, resulting in $4.6 million of cash sent to the U.S. On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, an economic stimulus package intended to provide support, principally in the form of tax benefits, to companies and individuals negatively impacted by the COVID-19 pandemic. Although the majority of the provisions included in the CARES Act did not immediately benefit the Company from a cash tax perspective due to its significant net operating losses, the Company has taken advantage of the deferral of the employer share (6.2% of employee wages) of Social Security payroll taxes that would otherwise have been owed from the date of enactment of the legislation through December 31, 2020, as afforded by the Act. Through September 30, 2020, the Company has deferred $4.3 million in cash payments and recorded reserves for such deferred payroll taxes in salaries, wages and benefits on the Consolidated Balance Sheets. The Company expects additional deferred cash payments of approximately $2 million to $3 million for the remainder of 2020, with total deferred amounts to be paid in two equal installments at December 31, 2021 and December 31, 2022. The Company is currently evaluating the potential benefit related to the Employee Retention Credit and intends to file for this credit in the fourth quarter of 2020. |
Earnings (Loss) Per Share |
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Earnings (Loss) Per Share |
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 discount) 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 for shares issuable for equity-based awards were excluded from the computation of diluted earnings (loss) per share for the three and nine months ended September 30, 2020 and 2019 because the effect of their inclusion would have been anti-dilutive. Common share equivalents for shares issuable upon the conversion of outstanding convertible notes were excluded from the computation of diluted earnings (loss) per share for the three and nine months ended September 30, 2020 and 2019 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 earnings (loss) per share for the three and nine months ended September 30, 2020 and 2019:
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
Note 9 - Inventories The components of inventories, net of reserves as of September 30, 2020 and December 31, 2019 were as follows:
In the second quarter of 2020, the Company recorded an additional allowance for inventory reserve of approximately $3.1 million. The additional reserve is associated with the energy end market and closure of the TMS facility in Houston. For more details, refer to “Note 5 – Disposition of Non-Core Assets.” |
Financing Arrangements |
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Financing Arrangements |
Note 10 - 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, 2019. Convertible Notes The components of the Convertible Notes as of September 30, 2020 and December 31, 2019 were as follows:
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 Convertible Notes mature on June 1, 2021, and accordingly are classified as a current liability in the Consolidated Balance Sheet as of September 30, 2020. The following table sets forth total interest expense recognized related to the Convertible Notes:
Amended Credit Agreement On October 15, 2019, the Company, as borrower, and certain domestic subsidiaries of the Company, as subsidiary guarantors, entered into a Third Amended and Restated Credit Agreement (the Amended Credit Agreement), with JP Morgan Chase Bank, N.A., as administrative agent (the Administrative Agent), Bank of America, N.A., as syndication agent, and the other lenders party thereto (collectively, the Lenders), which further amended and restated the Company’s Second Amended and Restated Credit Agreement dated as of January 26, 2018. The interest rate under the Amended Credit Agreement was 1.7% as of September 30, 2020. The amount available for borrowings under the credit agreement as of September 30, 2020 was $205.2 million, and the Company was in compliance with all covenants. In October 2020, the Company repaid the remaining $20 million outstanding balance on the Amended Credit Agreement using available cash. Fair Value Measurement The fair value of the Convertible Notes was approximately $74.9 million as of September 30, 2020. The fair value of the Convertible Notes, which falls within Level 1 of the fair value hierarchy as defined by Accounting Standards Codification (ASC) 820, Fair Value Measurements, is based on the last price traded in September 2020. TimkenSteel’s Credit Agreement is variable-rate debt. As such, the 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. Interest Paid The total cash interest paid for the nine months ended September 30, 2020 and 2019 was $4.5 million and $7.6 million, respectively.
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Retirement and Postretirement Plans |
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Defined Benefit Plans And Other Postretirement Benefit Plans Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement and Postretirement Plans |
Note 11 - Retirement and Postretirement Plans The components of net periodic benefit cost (income) for the three and nine months ended September 30, 2020 and 2019 were as follows:
The Salaried Plan has a provision that permits employees to elect to receive their pension benefits in a lump sum. In the first quarter of 2020, the cumulative cost of all lump sum payments was projected to exceed the sum of the service cost 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 2020, which resulted in a non-cash (gain) loss from remeasurement of ($4.1) million and $3.5 million for the three and nine months ended September 30, 2020, respectively.
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Stock-Based Compensation |
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Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation |
Note 12 – Stock-Based Compensation During the nine months ended September 30, 2020, the Board of Directors granted 931,244 time-vested restricted stock units, 182,180 performance-vested restricted stock units, and 511,020 stock options. Time-vested 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 should occur during the vesting period. The weighted average fair value of the restricted stock units granted during the nine months ended September 30, 2020 was $4.24 per share. There were no time-vested restricted stock units granted in the third quarter of 2020. Performance-vested restricted stock units issued in 2020 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 weighted average fair value of the performance-vested restricted stock units granted during the nine months ended September 30, 2020 was $4.98 per share. The Board of Directors granted 38,900 performance-vested restricted stock units in the third quarter of 2020. Stock options are issued with an exercise price equal to the closing market price of TimkenSteel common shares on the date of grant. The fair value of stock options is determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield. The weighted average exercise price and weighted average fair value of the stock option grants during the nine months ended September 30, 2020 were $5.26 per share and $2.23 per share, respectively. There were no stock option grants in the third quarter of 2020. TimkenSteel recognized stock-based compensation expense of $1.6 million and $5.2 million for the three and nine months ended September 30, 2020, compared to $1.4 million and $4.4 for the same periods in 2019, respectively. Future stock-based compensation expense regarding the unvested portion of all awards is approximately $6.7 million. The future expense is expected to be recognized over the remaining vesting periods through 2024. |
Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss) |
Note 13 - Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) for the nine months ended September 30, 2020 and 2019 by component were as follows:
The amount reclassified from accumulated other comprehensive income (loss) in the nine months ended September 30, 2020 and 2019 for the pension and postretirement liability adjustment was included in other income, net in the unaudited Consolidated Statements of Operations. |
Contingencies |
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Sep. 30, 2020 | |
Loss Contingency Accrual Disclosures [Abstract] | |
Contingencies |
Note 14 – Contingencies TimkenSteel has a number of loss exposures incurred in the ordinary course of business, such as environmental claims, product warranty claims, and 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, 2020 and December 31, 2019, TimkenSteel had a $0.9 million and a $1.5 million contingency reserve, respectively, related to loss exposures incurred in the ordinary course of business. |
Recent Accounting Pronouncements (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Adoption of New Accounting Standards |
Adoption of New Accounting Standards The Company adopted the following Accounting Standard Updates (ASU) in the first quarter of 2020, all of which were effective as of January 1, 2020, except ASU 2020-04, which became effective upon issuance on March 12, 2020. 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.
Accounting Standards Issued But Not Yet Adopted The Company has considered the recent ASUs issued by the Financial Accounting Standards Board summarized below:
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Basis of Presentation (Tables) |
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Organization Consolidation And Presentation Of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Change in Accounting Principle |
The following tables reflect the impact to the financial statement line items as a result of the change in accounting principle for the prior periods presented in the accompanying financial statements (dollars in millions, except per share data):
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Revenue Recognition (Tables) |
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Disaggregation of Revenue |
The following table provides the major sources of revenue by end-market sector for the three and nine months ended September 30, 2020 and 2019:
(1) “Other” sales by end-market sector includes the Company’s scrap and oil country tubular goods (OCTG) billet sales. The following table provides the major sources of revenue by product type for the three and nine months ended September 30, 2020 and 2019:
(2) “Other” sales by product type includes the Company’s scrap sales.
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Restructuring Charges (Tables) |
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Schedule of Restructuring Reserve |
The following is a summary of the restructuring reserve for the nine months ended September 30, 2020 and 2019:
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Other Expense (Income), Net (Tables) |
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Schedule of Other Expense (Income), net |
The following table provides the components of other expense (income), net for the three and nine months ended September 30, 2020 and 2019:
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Income Tax Provision (Tables) |
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Schedule of (Benefit) Provision for Income Taxes |
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Earnings (Loss) Per Share (Tables) |
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Schedule of Earnings Per Share, Basic and Diluted |
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, 2020 and 2019:
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Inventories (Tables) |
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Schedule of Components of Inventory |
The components of inventories, net of reserves as of September 30, 2020 and December 31, 2019 were as follows:
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Financing Arrangements (Tables) |
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Schedule of Components of Convertible Notes |
The components of the Convertible Notes as of September 30, 2020 and December 31, 2019 were as follows:
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Schedule of Interest Expense |
The following table sets forth total interest expense recognized related to the Convertible Notes:
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Retirement and Postretirement Plans (Tables) |
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Defined Benefit Plans And Other Postretirement Benefit Plans Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Defined Benefit Plans Disclosures |
The components of net periodic benefit cost (income) for the three and nine months ended September 30, 2020 and 2019 were as follows:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
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Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) |
Changes in accumulated other comprehensive income (loss) for the nine months ended September 30, 2020 and 2019 by component were as follows:
|
Revenue Recognition (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 205.9 | $ 274.2 | $ 619.5 | $ 981.9 |
Bar | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 118.5 | 179.7 | 379.3 | 645.0 |
Tube | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 21.6 | 32.2 | 77.6 | 122.6 |
Value-add | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 61.4 | 55.9 | 149.8 | 192.7 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 4.4 | 6.4 | 12.8 | 21.6 |
Mobile | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 103.1 | 110.2 | 236.9 | 389.7 |
Industrial | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 90.7 | 116.9 | 302.0 | 388.2 |
Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 7.0 | 32.6 | 46.8 | 147.5 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 5.1 | $ 14.5 | $ 33.8 | $ 56.5 |
Restructuring Charges - Narrative (Details) $ in Millions |
3 Months Ended | 9 Months Ended | 21 Months Ended | |
---|---|---|---|---|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2020
USD ($)
Position
|
Sep. 30, 2019
USD ($)
|
Sep. 30, 2020
USD ($)
Position
|
|
Restructuring And Related Activities [Abstract] | ||||
Number of positions eliminated | Position | 50 | 210 | ||
Restructuring charges | $ | $ 0.7 | $ 1.6 | $ 3.6 | $ 10.2 |
Restructuring Charges - Summary of Restructuring Reserve (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 21 Months Ended | |
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
|
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | $ 6.0 | |||
Restructuring charges | $ 0.7 | 1.6 | $ 3.6 | $ 10.2 |
Payments | (7.1) | (1.5) | ||
Ending balance | $ 0.5 | $ 0.5 | $ 2.1 | $ 0.5 |
Other Expense (Income), Net (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Other Income And Expenses [Abstract] | ||||
Pension and postretirement non-service benefit loss (income) | $ (6.7) | $ (5.1) | $ (19.7) | $ (12.4) |
Loss (gain) from remeasurement of benefit plans | (4.1) | 3.5 | 4.4 | |
Foreign currency exchange loss (gain) | (0.1) | 0.1 | 0.3 | |
Miscellaneous expense (income) | 0.3 | (0.2) | (0.1) | (0.1) |
Total other expense (income), net | $ (10.6) | $ (5.2) | $ (16.0) | $ (8.1) |
Other Expense (Income), Net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Other Income And Expenses [Abstract] | |||
Loss (gain) from remeasurement of benefit plans | $ (4.1) | $ 3.5 | $ 4.4 |
Income Tax Provision - Schedule of (Benefit) Provision for Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Tax Disclosure [Abstract] | ||||
Provision (benefit) for income taxes | $ 0.3 | $ (5.5) | $ 0.6 | $ (8.3) |
Effective tax rate | (2.20%) | 24.40% | (1.20%) | 24.60% |
Earnings (Loss) Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Numerator: | ||||||||
Net income (loss) | $ (13.9) | $ (15.3) | $ (19.9) | $ (17.0) | $ (11.9) | $ 3.5 | $ (49.1) | $ (25.4) |
Denominator: | ||||||||
Weighted average shares outstanding, basic (in shares) | 45.0 | 44.8 | 45.0 | 44.8 | ||||
Weighted average shares outstanding, diluted (in shares) | 45.0 | 44.8 | 45.0 | 44.8 | ||||
Basic earnings (loss) per share | $ (0.31) | $ (0.38) | $ (1.09) | $ (0.57) | ||||
Diluted earnings (loss) per share | $ (0.31) | $ (0.38) | $ (1.09) | $ (0.57) |
Inventories - Schedule of Inventory (Details) - USD ($) $ in Millions |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Manufacturing supplies | $ 40.3 | $ 49.8 |
Raw materials | 14.0 | 26.0 |
Work in process | 77.2 | 123.7 |
Finished products | 57.5 | 93.1 |
Gross inventory | 189.0 | 292.6 |
Allowance for inventory reserves | (14.7) | (10.7) |
Total Inventories, net | $ 174.3 | $ 281.9 |
Inventories - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2020 |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Inventory [Line Items] | |||
Inventory valuation reserves | $ 14.7 | $ 10.7 | |
Disposal Group, Held-for-sale, Not Discontinued Operation | |||
Inventory [Line Items] | |||
Inventory valuation reserves | $ 3.1 |
Financing Arrangements - Schedule of Convertible Debt (Details) - Convertible Notes - USD ($) $ in Millions |
Sep. 30, 2020 |
Dec. 31, 2019 |
May 31, 2016 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Principal | $ 86.3 | $ 86.3 | |
Less: Debt issuance costs, net of amortization | (0.4) | (0.7) | $ (2.4) |
Less: Debt discount, net of amortization | (3.7) | (7.0) | |
Convertible notes, net | $ 82.2 | $ 78.6 | $ 66.9 |
Financing Arrangements - Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 29, 2020 |
May 31, 2016 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Debt Instrument [Line Items] | |||||
Interest paid | $ 4.5 | $ 7.6 | |||
Convertible Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Effective interest rate | 12.00% | ||||
Initial value of principal | $ 66.9 | 82.2 | $ 78.6 | ||
Principal amount allocated to conversion feature | 19.4 | ||||
Transaction costs, debt | 2.4 | 0.4 | $ 0.7 | ||
Transaction costs, equity component of convertible debt | $ 0.7 | ||||
Maturity date | Jun. 01, 2021 | ||||
Fair value of convertible notes | $ 74.9 | ||||
Third Amended Credit Facility | Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Effective interest rate | 1.70% | ||||
Amount available for borrowings under amended credit agreement | $ 205.2 | ||||
Third Amended Credit Facility | Credit Agreement | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Repayments of lines of credit | $ 20.0 |
Financing Arrangements - Schedule of Interest Expense (Details) - Convertible Senior Notes - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Debt Instrument [Line Items] | ||||
Contractual interest expense | $ 1.3 | $ 1.3 | $ 3.9 | $ 3.9 |
Amortization of debt issuance costs | 0.1 | 0.1 | 0.3 | 0.3 |
Amortization of debt discount | 1.1 | 1.0 | 3.3 | 3.0 |
Total | $ 2.5 | $ 2.4 | $ 7.5 | $ 7.2 |
Retirement and Postretirement Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Pension | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | $ 4.8 | $ 4.4 | $ 14.5 | $ 13.1 |
Interest cost | 10.5 | 12.2 | 32.2 | 36.7 |
Expected return on plan assets | (16.1) | (16.3) | (48.3) | (48.9) |
Amortization of prior service cost | 0.1 | 0.1 | 0.3 | 0.3 |
Net remeasurement (gains) losses | (4.1) | 3.5 | ||
Net Periodic Benefit Cost (Income) | (4.8) | 0.4 | 2.2 | 1.2 |
Postretirement | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | 0.3 | 0.3 | 0.9 | 0.9 |
Interest cost | 1.0 | 1.3 | 3.1 | 4.8 |
Expected return on plan assets | (0.9) | (1.0) | (2.7) | (2.9) |
Amortization of prior service cost | (1.5) | (1.4) | (4.5) | (2.4) |
Net remeasurement (gains) losses | 4.4 | |||
Net Periodic Benefit Cost (Income) | $ (1.1) | $ (0.8) | $ (3.2) | $ 4.8 |
Retirement and Postretirement Plans - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
|
Pension | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
(Gain) loss from remeasurement of benefit plans | $ (4.1) | $ 3.5 |
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock options, shares granted | 0 | 511,020 | ||
Weighted average exercise price of stock option grants | $ 5.26 | |||
Weighted average fair value of stock option grants | $ 2.23 | |||
Stock-based compensation expense | $ 1.6 | $ 1.4 | $ 5.2 | $ 4.4 |
Future stock-based compensation expense | $ 6.7 | |||
Restricted Stock Units | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Shares granted | 0 | 931,244 | ||
Weighted average fair value of shares granted | $ 4.24 | |||
Performance Shares | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Shares granted | 38,900 | 182,180 | ||
Weighted average fair value of shares granted | $ 4.98 |
Contingencies - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Loss Contingency Accrual Disclosures [Abstract] | ||
Contingency reserves | $ 0.9 | $ 1.5 |