Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 15, 2018 |
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Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | TimkenSteel Corporation | |
Entity Central Index Key | 0001598428 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 44,529,226 |
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2018 |
Mar. 31, 2017 |
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Income Statement [Abstract] | ||
Net sales | $ 380.8 | $ 309.4 |
Cost of products sold | 359.7 | 292.4 |
Gross Profit | 21.1 | 17.0 |
Selling, general and administrative expenses | 24.7 | 22.9 |
Operating Loss | (3.6) | (5.9) |
Interest expense | 4.6 | 3.6 |
Other income, net | 6.4 | 4.5 |
Loss Before Income Taxes | (1.8) | (5.0) |
Provision for income taxes | 0.1 | 0.3 |
Net Loss | $ (1.9) | $ (5.3) |
Per Share Data: | ||
Basic loss per share (in dollars per share) | $ (0.04) | $ (0.12) |
Diluted loss per share (in dollars per share) | (0.04) | (0.12) |
Dividends per share (in dollars per share) | $ 0.00 | $ 0.00 |
Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2018 |
Mar. 31, 2017 |
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Statement of Comprehensive Income [Abstract] | ||
Net Loss | $ (1.9) | $ (5.3) |
Other comprehensive income, net of tax: | ||
Foreign currency translation adjustments | 0.8 | 0.2 |
Pension and postretirement liability adjustments | 0.1 | 0.3 |
Other comprehensive income, net of tax | 0.9 | 0.5 |
Comprehensive Loss, net of tax | $ (1.0) | $ (4.8) |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
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Statement of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 1.5 | $ 1.4 |
Company preferred stock, no par value, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred shares, issued (in shares) | 0 | 0 |
Common shares, authorized (in shares) | 200,000,000 | 200,000,000 |
Common shares, issued (in shares) | 45,700,000 | 45,700,000 |
Treasury shares (in shares) | 1,200,000 | 1,300,000 |
Company and Basis of Presentation |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Company and Basis of Presentation | Company and Basis of Presentation The accompanying Unaudited Consolidated Financial Statements have been prepared 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, 2017. TimkenSteel Corporation (the Company or TimkenSteel) manufactures alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately 2 million tons and shipment capacity of 1.5 million tons. TimkenSteel’s portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing (tubes), value-add solutions such as precision steel components, and billets. In addition, TimkenSteel manages machining, thermal treatment, and raw material recycling programs that are used as a feeder system for the Company’s melt operations. The Company’s products and services are used in a diverse range of demanding applications in the following market sectors: oil and gas; oil country tubular goods (OCTG); automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation. The SBQ bars, tubes, and billets production processes take place at the Company’s Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars, seamless mechanical tubes and billets the Company produces and includes three manufacturing facilities: the Faircrest, Harrison, and Gambrinus facilities. TimkenSteel’s value-add solutions production processes take place at three downstream manufacturing facilities: TimkenSteel Material Services (Houston, TX), Tryon Peak (Columbus, NC), and St. Clair (Eaton, OH). Many of the production processes are integrated, and the manufacturing facilities produce products that are sold in all of the Company’s market sectors. As a result, investments in the Company’s facilities and resource allocation decisions affecting the Company’s operations are designed to benefit the overall business of the Company, not any specific aspect of the business. |
Recent Accounting Pronouncements |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adoption of New Accounting Standards The Company adopted the following Accounting Standard Updates (ASU) during the period ended March 31, 2018, all of which were effective as of date January 1, 2018. With the exception of ASU 2014-09 “Revenue from Contracts with Customers” and the related amendments (collectively, the new revenue standard), which is discussed below, the adoption of these standards did not have a material impact on the Unaudited Consolidated Financial Statements or the related Notes to the Unaudited Consolidated Financial Statements.
On January 1, 2018, TimkenSteel adopted the new revenue standard using the modified retrospective approach as applied to customer contracts that were not completed as of January 1, 2018. As a result, financial information for reporting periods beginning on or after January 1, 2018, are presented in accordance with the new revenue standard. Comparative financial information for reporting periods beginning prior to January 1, 2018, has not been adjusted and continues to be reported in accordance with the Company's revenue recognition policies prior to the adoption of the new revenue standard. The cumulative effect was an adjustment to the opening balance of retained earnings. Under the new revenue standard, the Company will continue to recognize revenue at a point in time when it transfers promised goods or services to customers. Refer to Note 10 - Revenue Recognition in the Notes to Unaudited Consolidated Financial Statements for further discussion. The following table outlines the cumulative effect of adopting the new revenue standard as of January 1, 2018.
The ASU 2014-09 adoption adjustment is due to transactions in which the Company bills a customer for product but retains physical possession of the product until it is transferred to the customer at a point in time in the future. Prior to the adoption of the new revenue standard, TimkenSteel would recognize revenue when the product was physically transferred to the customer. Under the new revenue standard, the Company has satisfied its performance obligation and the customer obtains control when the goods are ready to be transferred to the customer and revenue is recorded at that time. For the three months ended March 31, 2018, the adoption of the new revenue standard did not have a material impact on the Unaudited Consolidated Financial Statements. Accounting Standards Issued But Not Yet Adopted The Company has considered the recent ASUs issued by the FASB summarized below.
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories The components of inventories, net as of March 31, 2018 and December 31, 2017 were as follows:
Inventories are valued at the lower of cost or market, with approximately 65% valued by the LIFO method, and the remaining inventories, including manufacturing supplies inventory as well as international (outside the United States) inventories, valued by FIFO, average cost or specific identification methods. An actual valuation of the inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation. TimkenSteel projects that its LIFO reserve will increase for the year ending December 31, 2018 due primarily to higher anticipated manufacturing costs and inventory quantities. |
Property, Plant and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, Plant and Equipment The components of property, plant and equipment, net as of March 31, 2018 and December 31, 2017, were as follows:
Total depreciation expense was $17.0 million and $17.1 million for the three months ended March 31, 2018 and 2017, respectively. TimkenSteel recorded capitalized interest related to construction projects of $0.1 and $0.2 million for the three months ended March 31, 2018 and 2017, respectively. There were no impairment charges recorded during the three months ended March 31, 2018 and 2017. |
Intangible Assets |
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Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets The components of intangible assets, net as of March 31, 2018 and December 31, 2017 were as follows:
Intangible assets subject to amortization are amortized on a straight-line method over their legal or estimated useful lives. Amortization expense for intangible assets for the three months ended March 31, 2018 and 2017 was $1.5 million and $1.8 million, respectively. |
Financing Arrangements |
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Financing Arrangements | Financing Arrangements Convertible Notes In May 2016, the Company issued $75.0 million aggregate principal amount of Convertible Senior Notes, and an additional $11.3 million principal amount to cover over-allotments (Convertible Notes). The Indenture for the Convertible Notes dated May 31, 2016, which was filed with the Securities and Exchange Commission as an exhibit to a Form 8-K filed on May 31, 2016, contains a complete description of the terms of the Convertible Notes. The key terms are as follows: Maturity Date: June 1, 2021 unless repurchased or converted earlier Interest Rate: 6.0% cash interest per year Interest Payments Dates: June 1 and December 1 of each year, beginning on December 1, 2016 Initial Conversion Price: Approximately $12.58 per common share of the Company Initial Conversion Rate: 79.5165 common shares per $1,000 principal amount of Notes The net proceeds to the Company from the offering were $83.2 million, after deducting the initial underwriters’ discount and fees and the offering expenses payable by the Company. The Company used the net proceeds to repay a portion of the amounts outstanding under the Credit Agreement. The components of the Convertible Notes as of March 31, 2018 and December 31, 2017 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 following table sets forth total interest expense recognized related to the Convertible Notes for the three months ended March 31, 2018 and 2017:
The fair value of the Convertible Notes was approximately $146.6 million as of March 31, 2018. The fair value of the Convertible Notes, which falls within Level 1 of the fair value hierarchy, is based on the last price traded in March 2018. Holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding March 1, 2021 only under certain circumstances described in the Convertible Notes Indenture, based on the reported sale price of the Company’s common shares for specified trading days as a percentage of the conversion price of the Convertible Notes, and upon the occurrence of specified corporate events. On or after March 1, 2021 until the business day preceding the maturity date, holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amount, at their option. Upon conversion, the Company will pay or deliver, as the case may be, cash, common shares or a combination of cash and common shares, at its election. If the Company satisfies its conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and common shares, the amount of cash and number of common shares, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 40-trading day period. If the Company undergoes a fundamental change, subject to certain conditions, holders may require the Company to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to the repurchase date. Upon certain events of default occurring and continuing (including failure to pay principal or interest on the Convertible Notes when due and payable), the Trustee or the holders of at least 25% in principal amount may declare 100% of the principal and accrued and unpaid interest, if any, on all the Convertible Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving the Company or a significant subsidiary, 100% of the principal and accrued and unpaid interest on the Convertible Notes will become due and payable immediately. Other Long-Term Debt The components of other long-term debt as of March 31, 2018 and December 31, 2017 were as follows:
Credit Agreement On February 26, 2016, the Company entered into a $265 million asset based Revolving Credit Facility (Credit Agreement). Amended Credit Agreement On January 26, 2018, the Company as borrower, and certain domestic subsidiaries, as subsidiary guarantors, entered into the Second Amended and Restated Credit Agreement (Amended Credit Agreement), with JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and the other lenders party thereto, which amended and restated the Company’s Credit Agreement. The Amended Credit Agreement provides for a $300.0 million asset-based revolving credit facility, including a $15.0 million sublimit for the issuance of commercial and standby letters of credit and a $30.0 million sublimit for swingline loans. Pursuant to the terms of the Amended Credit Agreement, the Company is entitled, on up to two occasions and subject to the satisfaction of certain conditions, to request increases in the commitments under the Amended Credit Agreement in the aggregate principal amount of up to $50.0 million, to the extent that existing or new lenders agree to provide such additional commitments. The availability of borrowings under the Amended Credit Agreement is subject to a borrowing base calculation based upon a valuation of the eligible accounts receivable, inventory and machinery and equipment of the Company and the subsidiary guarantors, each multiplied by an applicable advance rate. The availability of borrowings may be further modified by reserves established from time to time by the administrative agent in its permitted discretion. The interest rate per annum applicable to loans under the Amended Credit Agreement will be, at the Company’s option, equal to either (i) the alternate base rate plus the applicable margin or (ii) the relevant adjusted LIBO rate for an interest period of one, two, three or six months (as selected by the Company) plus the applicable margin. The base rate will be a fluctuating rate per annum equal to the greatest of (i) the prime rate of the administrative agent, (ii) the effective Federal Reserve Bank of New York rate plus 0.50% and (iii) the adjusted LIBO rate for a one-month interest period on the applicable date, plus 1.00%. The adjusted LIBO rate will be equal to the applicable London interbank offered rate for the selected interest period, as adjusted for statutory reserve requirements for eurocurrency liabilities. The applicable margin will be determined by a pricing grid based on the Company’s average quarterly availability. In addition, the Company will pay a commitment fee on the average daily unused amount of the credit facility in a percentage determined by the Company’s average daily availability for the most recently completed calendar month. The interest rate under the Amended Credit Agreement was 3.9% as of March 31, 2018. The amount available under the Amended Credit Agreement as of March 31, 2018 was $167.4 million. The proceeds of the Amended Credit Agreement will be used to finance working capital, capital expenditures, certain permitted acquisitions and other general corporate purposes. In addition, $30.2 million of the proceeds were used to redeem the revenue refunding bonds (discussed below). All of the indebtedness under the Amended Credit Agreement is guaranteed by the Company’s material domestic subsidiaries, as well as any other domestic subsidiary the Company elects to make a party to the Amended Credit Agreement, and is secured by substantially all of the personal property of the Company and the subsidiary guarantors. The Amended Credit Agreement matures on January 26, 2023. Prior to the maturity date, amounts outstanding are required to be repaid (without reduction of the commitments thereunder) from mandatory prepayment events from the proceeds of certain asset sales, equity or debt issuances or casualty events. The Amended Credit Agreement contains certain customary covenants, including covenants that limit the ability of the Company and its subsidiaries to, among other things, (i) incur or suffer to exist certain liens, (ii) make investments, (iii) incur or guaranty additional indebtedness, (iv) enter into consolidations, mergers, acquisitions, sale-leaseback transactions and sales of assets, (v) make distributions and other restricted payments, (vi) change the nature of its business, (vii) engage in transactions with affiliates and (viii) enter into restrictive agreements, including agreements that restrict the ability to incur liens or make distributions. In addition, the Amended Credit Agreement requires the Company to (i) unless certain conditions are met, maintain certain minimum liquidity as specified in the Amended Credit Agreement during the period commencing on March 1, 2021 and ending on June 1, 2021 and (ii) maintain a minimum specified fixed charge coverage ratio on a springing basis if minimum availability requirements as specified in the Amended Credit Agreement are not maintained. The Amended Credit Agreement contains certain customary events of default. If any event of default occurs and is continuing, the Lenders would be entitled to take various actions, including the acceleration of amounts due under the Amended Credit Agreement, and exercise other rights and remedies. Revenue Refunding Bonds In connection to the Amended Credit Agreement, on January 23, 2018, the Company redeemed in full $12.2 million of Ohio Water Development Revenue Refunding Bonds (originally due on November 1, 2025), $9.5 million of Ohio Air Quality Development Revenue Refunding Bonds (originally due on November 1, 2025) and $8.5 million of Ohio Pollution Control Revenue Refunding Bonds (originally due on June 1, 2033). |
Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss for the three months ended March 31, 2018 and 2017 by component are as follows:
The amount reclassified from accumulated other comprehensive loss for the pension and postretirement liability adjustment was included in other income, net in the Unaudited Consolidated Statements of Operations. These accumulated other comprehensive loss components are components of net periodic benefit cost. See Note 9 - Retirement and Postretirement Plans for additional information. |
Changes in Shareholders' Equity |
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Changes in Shareholders' Equity | Note 8 - Changes in Shareholders' Equity Changes in the components of shareholders’ equity for the three months ended March 31, 2018 were as follows:
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Retirement and Postretirement Benefits |
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Defined Benefit Plan [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement and Postretirement Plans | Retirement and Postretirement Plans The components of net periodic benefit cost for the three months ended March 31, 2018 and 2017 were as follows:
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Note 10 - Revenue Recognition As discussed in Note 2 - Recent Accounting Pronouncements, on January 1, 2018 TimkenSteel adopted the new revenue recognition standard. Under this new standard, TimkenSteel recognizes revenue from contracts at a point in time when it has satisfied its performance obligation and the customer obtains control of the goods, at the amount that reflects the consideration the Company expects to receive for those goods. The Company receives and acknowledges purchase orders from its customers, which define the quantity, pricing, payment and other applicable terms and conditions. In some cases, the Company receives a blanket purchase order from its customer, which includes pricing, payment and other terms and conditions, with quantities defined at the time the customer issues periodic releases from the blanket purchase order. Certain contracts contain variable consideration, which primarily consists of rebates, that are accounted for in net sales and accrued based on the estimated probability of the requirements being met. Amounts billed to customers related to shipping and handling costs are included in net sales and related costs are included in costs of products sold in the Unaudited Consolidated Financial Statements. The following table provides the major sources of revenue by end market sector.
The following table provides the major sources of revenue by product type.
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Earnings Per Share |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic loss per share is computed based upon the weighted average number of common shares outstanding. Diluted loss per share are 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 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 loss per share. Common Share equivalents, which include shares issuable for equity-based awards and upon the conversion of outstanding convertible notes, were excluded from the computation of diluted earnings (loss) per share because the effect of their inclusion would have been anti-dilutive. The following table sets forth the reconciliation of the numerator and the denominator of basic loss per share and diluted loss per share for the three months ended March 31, 2018 and 2017:
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Income Tax Provision |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Income Tax Provision | Income Tax Provision TimkenSteel’s provision (benefit) for income taxes in interim periods is computed by applying the appropriate estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items, including interest on prior-year tax liabilities, are recorded during the periods in which they occur.
For the three months ended March 31, 2018 and the years ended December 31, 2017 and 2016, operating losses generated in the U.S. resulted in a decrease in the carrying value of the Company’s U.S. net deferred tax liability to the point that would result in a net U.S. deferred tax asset at March 31, 2018, December 31, 2017 and December 31, 2016. In light of TimkenSteel’s recent operating performance in the U.S. and current industry conditions, the Company assessed, based upon all available evidence, and concluded that it was more likely than not that it would not realize its U.S. deferred tax assets. As a result, the Company will maintain a full valuation allowance against its deferred tax assets in the U.S. and applicable foreign countries until sufficient positive evidence exists to conclude that a valuation allowance is not necessary. 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. Tax Cuts and Jobs Act Bill On December 22, 2017, the Tax Cut and Jobs Act (the Act) was signed into law, which resulted in significant changes to U.S. tax and related laws. Some of the provisions of the Act affecting corporations include, but are not limited to reducing the federal corporate income tax rate from 35% to 21%, limiting the interest expense deduction, expensing of cost of acquired qualified property and eliminating the domestic production activities deduction. We are currently evaluating the impact of the Act, however we do not anticipate that the Act will have a material impact on our financial condition and results of operations. At this time, we do not anticipate a significant reduction in our effective income tax rate or our net deferred federal income tax assets as a result of the income tax rate reduction, as we expect to be in a valuation allowance in 2018. Other provisions of the Act include a new minimum tax on certain foreign earnings, the Global Intangibles Low-taxed Income, a new tax on certain payments to foreign related parties, the Base Erosion Anti-avoidance Tax, a new incentive for Foreign-derived Intangibles Income, changes to the limitation on the deductibility of certain executive compensation, and new limitations on the deductibility of interest expense. Generally, these other provisions take effect for the Company in the year ending December 31, 2018. On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 (SAB 118). This guidance allows registrants a “measurement period,” not to exceed one year from the date of enactment, to complete their accounting for the tax effects of the Act. SAB 118 further directs that, during the measurement period, registrants that are able to make reasonable estimates of the tax effects of the Act should include those amounts in their financial statements as “provisional” amounts. Registrants should reflect adjustments over subsequent periods as they are able to refine their estimates and complete their accounting for the tax effects of the Act. The tax effects related to the Act described in the paragraph above represent the Company’s reasonable estimates within the meaning of SAB 118. Also, it is expected that the U.S. Treasury will issue regulations and other guidance on the application of certain provisions of the Act. In subsequent periods, but within the measurement period, the Company will analyze that guidance and other necessary information. |
Contingencies |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Contingency Accrual, Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contingencies | 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. As of March 31, 2018 and December 31, 2017, TimkenSteel had a $0.8 million and a $0.9 million contingency reserve, respectively, related to loss exposures incurred in the ordinary course of business. Environmental Matters From time to time, TimkenSteel may be a party to lawsuits, claims or other proceedings related to environmental matters and/or may receive notices of potential violations of environmental laws and regulations from the U.S. Environmental Protection Agency (EPA) and similar state or local authorities. TimkenSteel recorded reserves for such environmental matters as other current and non-current liabilities on the Consolidated Balance Sheets. Accruals related to such environmental matters represent management’s best estimate of the fees and costs associated with these matters. Although it is not possible to predict with certainty the outcome of such matters, management believes that their ultimate dispositions should not have a material adverse effect on TimkenSteel’s financial position, cash flows, or results of operations. As of March 31, 2018 and December 31, 2017, TimkenSteel had a $0.9 million and $0.5 million reserve for such environmental matters as other current and non-current liabilities on the Unaudited Consolidated Balance Sheets, respectively. The following rollforward of the accrual related to environmental matters for the three months ended March 31, 2018 and 2017:
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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) during the period ended March 31, 2018, all of which were effective as of date January 1, 2018. With the exception of ASU 2014-09 “Revenue from Contracts with Customers” and the related amendments (collectively, the new revenue standard), which is discussed below, the adoption of these standards did not have a material impact on the Unaudited Consolidated Financial Statements or the related Notes to the Unaudited Consolidated Financial Statements.
On January 1, 2018, TimkenSteel adopted the new revenue standard using the modified retrospective approach as applied to customer contracts that were not completed as of January 1, 2018. As a result, financial information for reporting periods beginning on or after January 1, 2018, are presented in accordance with the new revenue standard. Comparative financial information for reporting periods beginning prior to January 1, 2018, has not been adjusted and continues to be reported in accordance with the Company's revenue recognition policies prior to the adoption of the new revenue standard. The cumulative effect was an adjustment to the opening balance of retained earnings. Under the new revenue standard, the Company will continue to recognize revenue at a point in time when it transfers promised goods or services to customers. Refer to Note 10 - Revenue Recognition in the Notes to Unaudited Consolidated Financial Statements for further discussion. The following table outlines the cumulative effect of adopting the new revenue standard as of January 1, 2018.
The ASU 2014-09 adoption adjustment is due to transactions in which the Company bills a customer for product but retains physical possession of the product until it is transferred to the customer at a point in time in the future. Prior to the adoption of the new revenue standard, TimkenSteel would recognize revenue when the product was physically transferred to the customer. Under the new revenue standard, the Company has satisfied its performance obligation and the customer obtains control when the goods are ready to be transferred to the customer and revenue is recorded at that time. For the three months ended March 31, 2018, the adoption of the new revenue standard did not have a material impact on the Unaudited Consolidated Financial Statements. Accounting Standards Issued But Not Yet Adopted The Company has considered the recent ASUs issued by the FASB summarized below.
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Recent Accounting Pronouncements (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounting Changes | The Company adopted the following Accounting Standard Updates (ASU) during the period ended March 31, 2018, all of which were effective as of date January 1, 2018. With the exception of ASU 2014-09 “Revenue from Contracts with Customers” and the related amendments (collectively, the new revenue standard), which is discussed below, the adoption of these standards did not have a material impact on the Unaudited Consolidated Financial Statements or the related Notes to the Unaudited Consolidated Financial Statements.
The following table outlines the cumulative effect of adopting the new revenue standard as of January 1, 2018.
The Company has considered the recent ASUs issued by the FASB summarized below.
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Inventory | The components of inventories, net as of March 31, 2018 and December 31, 2017 were as follows:
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Property, Plant and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | The components of property, plant and equipment, net as of March 31, 2018 and December 31, 2017, were as follows:
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Intangible Assets (Tables) |
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Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | The components of intangible assets, net as of March 31, 2018 and December 31, 2017 were as follows:
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Financing Arrangements (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Convertible Notes | The components of the Convertible Notes as of March 31, 2018 and December 31, 2017 were as follows:
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Schedule of Long-term Debt Instruments | The components of other long-term debt as of March 31, 2018 and December 31, 2017 were as follows:
The following table sets forth total interest expense recognized related to the Convertible Notes for the three months ended March 31, 2018 and 2017:
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Accumulated Other Comprehensive 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 loss for the three months ended March 31, 2018 and 2017 by component are as follows:
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Changes in Shareholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Shareholders' Equity | Changes in the components of shareholders’ equity for the three months ended March 31, 2018 were as follows:
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Retirement and Postretirement Benefits (Tables) |
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Defined Benefit Plan [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Periodic Benefit Cost | The components of net periodic benefit cost for the three months ended March 31, 2018 and 2017 were as follows:
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Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | As discussed in Note 2 - Recent Accounting Pronouncements, on January 1, 2018 TimkenSteel adopted the new revenue recognition standard. Under this new standard, TimkenSteel recognizes revenue from contracts at a point in time when it has satisfied its performance obligation and the customer obtains control of the goods, at the amount that reflects the consideration the Company expects to receive for those goods. The Company receives and acknowledges purchase orders from its customers, which define the quantity, pricing, payment and other applicable terms and conditions. In some cases, the Company receives a blanket purchase order from its customer, which includes pricing, payment and other terms and conditions, with quantities defined at the time the customer issues periodic releases from the blanket purchase order. Certain contracts contain variable consideration, which primarily consists of rebates, that are accounted for in net sales and accrued based on the estimated probability of the requirements being met. Amounts billed to customers related to shipping and handling costs are included in net sales and related costs are included in costs of products sold in the Unaudited Consolidated Financial Statements. The following table provides the major sources of revenue by end market sector.
The following table provides the major sources of revenue by product type.
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Earnings Per Share (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the reconciliation of the numerator and the denominator of basic loss per share and diluted loss per share for the three months ended March 31, 2018 and 2017:
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Income Tax Provision (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Schedule of (Benefit) Provision for Income Taxes |
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Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Contingency Accrual, Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loss Contingencies by Contingency | The following rollforward of the accrual related to environmental matters for the three months ended March 31, 2018 and 2017:
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Company and Basis of Presentation - Narrative (Details) T in Millions |
3 Months Ended |
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Mar. 31, 2018
manufacturing_facility
T
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Annual melt capacity | 2.0 |
Shipment capacity | 1.5 |
Number of manufacturing facilities | manufacturing_facility | 3 |
Recent Accounting Pronouncements - Adoption of New Accounting Standards (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Inventories, net | $ 252.8 | $ 220.7 | $ 224.0 |
Other current liabilities | 19.4 | 23.6 | 27.6 |
Retained deficit | $ (239.3) | (237.3) | (238.0) |
Calculated under Revenue Guidance in Effect before Topic 606 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Inventories, net | 224.0 | ||
Other current liabilities | 27.6 | ||
Retained deficit | $ (238.0) | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Inventories, net | (3.3) | ||
Other current liabilities | (4.0) | ||
Retained deficit | $ 0.7 |
Inventories - Schedule of Inventory (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Inventory Disclosure [Abstract] | |||
Manufacturing supplies | $ 38.7 | $ 36.3 | |
Raw materials | 34.4 | 31.9 | |
Work in process | 165.6 | 137.8 | |
Finished products | 79.9 | 82.9 | |
Gross inventory | 318.6 | 288.9 | |
Allowance for surplus and obsolete inventory | (7.4) | (7.8) | |
LIFO reserve | (58.4) | (57.1) | |
Total Inventories, net | $ 252.8 | $ 220.7 | $ 224.0 |
Inventories - Narrative (Details) |
Mar. 31, 2018 |
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Inventory Disclosure [Abstract] | |
Percentage of LIFO inventory | 65.00% |
Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Land | $ 13.4 | $ 13.4 |
Buildings and improvements | 422.8 | 420.6 |
Machinery and equipment | 1,399.2 | 1,387.4 |
Construction in progress | 17.1 | 30.4 |
Subtotal | 1,852.5 | 1,851.8 |
Less allowances for depreciation | (1,160.6) | (1,145.1) |
Property, Plant and Equipment, net | $ 691.9 | $ 706.7 |
Property, Plant and Equipment - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
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Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 17.0 | $ 17.1 |
Interest costs capitalized | $ 0.1 | $ 0.2 |
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 74.5 | $ 74.4 |
Accumulated Amortization | 55.7 | 54.5 |
Net Carrying Amount | 18.8 | 19.9 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 6.3 | 6.3 |
Accumulated Amortization | 4.3 | 4.1 |
Net Carrying Amount | 2.0 | 2.2 |
Technology use | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 9.0 | 9.0 |
Accumulated Amortization | 6.0 | 5.9 |
Net Carrying Amount | 3.0 | 3.1 |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 59.2 | 59.1 |
Accumulated Amortization | 45.4 | 44.5 |
Net Carrying Amount | $ 13.8 | $ 14.6 |
Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
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Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortization expense for intangible assets | $ 1.5 | $ 1.8 |
Financing Arrangements - Schedule of Convertible Debt (Details) - Convertible Senior Notes - Convertible Senior Notes, due 2021 (6.00% fixed rate) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
May 31, 2016 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Principal | $ 86.3 | $ 86.3 | |
Less: Debt issuance costs, net of amortization | (1.5) | (1.6) | $ (2.4) |
Less: Debt discount, net of amortization | (13.7) | (14.6) | |
Net carrying amount | $ 71.1 | $ 70.1 | $ 66.9 |
Financing Arrangements - Schedule of Interest Expense (Details) - Convertible Senior Notes - Convertible Senior Notes, due 2021 (6.00% fixed rate) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 1.3 | $ 1.3 |
Amortization of debt issuance costs | 0.1 | 0.1 |
Amortization of debt discount | 0.9 | 0.8 |
Total | $ 2.3 | $ 2.2 |
Retirement and Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Pension | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Service cost | $ 4.3 | $ 4.6 |
Interest cost | 11.4 | 12.2 |
Expected return on plan assets | (18.4) | (17.5) |
Amortization of prior service cost | 0.1 | |
Net Periodic Benefit Cost | (2.6) | (0.6) |
Postretirement | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Service cost | 0.4 | 0.4 |
Interest cost | 1.9 | 2.1 |
Expected return on plan assets | (1.2) | (1.4) |
Amortization of prior service cost | 0.1 | 0.3 |
Net Periodic Benefit Cost | $ 1.2 | $ 1.4 |
Revenue Recognition (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 380.8 | $ 309.4 |
Bar | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 234.4 | 198.1 |
Tube | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 63.7 | 34.6 |
Value-add | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 72.7 | 67.9 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 10.0 | 8.8 |
Mobile | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 142.5 | 136.6 |
Industrial | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 147.7 | 110.6 |
Energy | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 49.1 | 23.7 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 41.5 | $ 38.5 |
Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Numerator: | ||
Net loss for basic and diluted earnings per share | $ (1.9) | $ (5.3) |
Denominator: | ||
Weighted average shares outstanding, basic (in shares) | 44.5 | 44.3 |
Weighted average shares outstanding, diluted (in shares) | 44.5 | 44.3 |
Basic loss per share (in dollars per share) | $ (0.04) | $ (0.12) |
Diluted loss per share (in dollars per share) | $ (0.04) | $ (0.12) |
Income Tax Provision (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 0.1 | $ 0.3 |
Effective tax rate | (5.60%) | (6.00%) |
Contingencies - Schedule of Contingencies (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Loss Contingency Accrual, Disclosures [Abstract] | |||
Contingency reserves | $ 0.8 | $ 0.9 | |
Accrual for Environmental Loss Contingencies [Roll Forward] | |||
Beginning balance, January 1 | 0.5 | $ 0.6 | |
Expenses | 0.4 | 0.0 | |
Payments | 0.0 | 0.0 | |
Ending balance, March 31 | $ 0.9 | $ 0.6 |