Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2021 |
Mar. 31, 2020 |
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| Income Statement [Abstract] | ||
| Net sales | $ 273.6 | $ 259.7 |
| Cost of products sold | 242.9 | 251.9 |
| Gross Profit | 30.7 | 7.8 |
| Selling, general and administrative expenses | 19.5 | 23.4 |
| Restructuring charges | 0.5 | 0.6 |
| Loss (gain) on sale or disposal of assets, net | (2.3) | |
| Impairment charges | 8.2 | |
| Interest expense | 1.9 | 3.2 |
| Other (income) expense, net | (9.4) | 2.7 |
| Income (Loss) Before Income Taxes | 10.0 | (19.8) |
| Provision (benefit) for income taxes | 0.2 | 0.1 |
| Net Income (Loss) | $ 9.8 | $ (19.9) |
| Per Share Data: | ||
| Basic earnings (loss) per share | $ 0.22 | $ (0.44) |
| Diluted earnings (loss) per share | $ 0.20 | $ (0.44) |
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
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| Statement Of Income And Comprehensive Income [Abstract] | ||
| Net income (loss) | $ 9.8 | $ (19.9) |
| Other comprehensive income (loss) | ||
| Foreign currency translation adjustments | 0.1 | (1.8) |
| Pension and postretirement liability adjustments | (1.5) | (1.1) |
| Other comprehensive income (loss), net of tax | (1.4) | (2.9) |
| Comprehensive Income (Loss), net of tax | $ 8.4 | $ (22.8) |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement Of Financial Position [Abstract] | ||
| Allowances for accounts receivable | $ 1.6 | $ 1.3 |
| 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) | 100,000 | 600,000 |
Basis of Presentation |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| 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, 2020. Certain items previously reported in specific financial statement captions have been reclassified to conform with current year presentation. |
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 2021.
Upon adoption of ASU 2020-06 prospectively as of January 1, 2021, all outstanding Convertible Notes are now fully classified as a liability, there is no longer a separate equity component and the Convertible Notes will no longer have a debt discount that is amortized. This resulted in a decrease of $10.6 million to additional paid-in capital and an increase of $1.1 million and $5.3 million to current convertible notes, net and non-current convertible notes, net, respectively, on the Consolidated Balance Sheets as of January 1, 2021. Additionally, retained deficit was reduced by $4.2 million in the Consolidated Balance Sheets as of January 1, 2021 to remove amortization expense recognized in prior periods. The adoption of this standard did not have an effect on the Company’s cash flows, liquidity, and the methodology used for the earnings per share calculation. Refer to “Note 10 – Financing Arrangements” for additional information on the Company’s Convertible Notes. There are no current ASUs issued, but not adopted, that will have an impact on the Company. Legislation related to the COVID-19 Pandemic Coronavirus Aid, Relief, and Economic Security ("CARES") Act 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 took 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 CARES Act. At December 31, 2020, the Company had deferred $6.4 million in cash payments and recorded reserves for such deferred payroll taxes in salaries, wages and benefits on the Consolidated Balance Sheets. The deferred amount of payments is to be paid in two equal installments at December 31, 2021 and December 31, 2022. The CARES Act also provided for an employee retention credit (“Employee Retention Credit”), which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee throughout the year. The Company qualified for the tax credit in the second and third quarters of 2020 and accrued a benefit of $2.3 million in the fourth quarter of 2020 related to the Employee Retention Credit in other (income) expense, net on the Company’s Consolidated Statements of Operations. The Company is currently in the process of filing for this credit. Consolidated Appropriations Act, 2021 (“CAA”) On December 27, 2020, the President of the United States signed the Consolidated Appropriation Act, 2021 (“CAA”). The CAA includes additional COVID-19 relief that expands upon the relief provided in the CARES Act, including, but not limited to, the extension of tax deductions, credits, and incentives. The Company has evaluated the CAA for any potential impact. While it was determined that the CAA revised and extended the Employee Retention Credit into 2021, the CAA is not expected to have an impact on the Company as furloughs related to the COVID-19 pandemic ceased in 2020. Furthermore, the Company does not expect any of the other provisions within the CAA to provide a benefit. American Rescue Plan Act of 2021 (“ARPA”) On March 11, 2021, the President of the United States signed the American Rescue Plan Act of 2021 (“ARPA”). APRA strengthens and extends certain programs enacted through the CARES Act and establishes new relief programs aimed at mitigating the financial impact of the COVID-19 pandemic. The Company is evaluating the provisions within the ARPA. At this time, two provisions are anticipated to impact the Company. The first applicable provision imposes new requirements related to health coverage provided by the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). Under the ARPA, employers are required to provide a 100% premium subsidy for COBRA health care continuation coverage for certain employees for the period of April 1, 2021 through September 30, 2021. The Company will be reimbursed for this additional coverage through fully refundable payroll tax credits. The second applicable provision offers funding relief for single-employer defined benefit pension plans. Specifically, the ARPA provides enhanced interest rate stabilization, as well as extended amortization of funding shortfalls. The Company is currently evaluating the impact and timing of election options permitted by the ARPA on required contributions to our domestic defined benefit pension plans. At this time based on current assumptions and expected asset returns, pending further IRS guidance, we believe that the ARPA provisions are likely to result in a delay in the timing of required Company contributions until 2028. However, these estimates are subject to significant uncertainty.
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Revenue Recognition |
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| Revenue Recognition |
Note 3 - Revenue Recognition The following table provides the major sources of revenue by end-market sector for the three months ended March 31, 2021 and 2020:
(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 months ended March 31, 2021 and 2020:
(2) “Other” sales by product type includes the Company’s scrap sales.
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Restructuring Charges |
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| Restructuring Charges |
Note 4 - Restructuring Charges Beginning in 2019, 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 230 salaried positions and recognized restructuring charges of $12.2 million. Restructuring charges in the first quarter of 2021 amounted to $0.5 million, consisting of $0.3 million related to the transition of customers to other TimkenSteel manufacturing equipment due to the discontinuation of specific small-diameter seamless mechanical tube manufacturing and the indefinite idling of our Harrison melt and casting activities (refer to “Note 5 – Disposition of Non-Core Assets” for additional information). The remaining $0.2 million related to severance and employee-related benefits as a result of continued organizational changes. Approximately 15 salaried positions were eliminated in the first quarter of 2021. TimkenSteel recorded reserves for such restructuring charges as other current liabilities on the Consolidated Balance Sheets. The reserve balance at March 31, 2021 is expected to be substantially used in the next twelve months. The following is a summary of the restructuring reserve for the three months ended March 31, 2021 and 2020.
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Disposition of Non-Core Assets |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Discontinued Operations And Disposal Groups [Abstract] | |
| Disposition of Non-Core Assets |
Note 5 - Disposition of Non-Core Assets TimkenSteel Material Services Facility During the first quarter of 2020, management completed its previously announced plan to close the Company’s TMS facility in Houston and began selling the assets at the facility. Accelerated depreciation and amortization on TMS assets of $1.6 million was recorded in the first quarter of 2020 to reduce the net book value of the machinery and equipment to its expected fair value. Subsequent to the closure, certain assets were sold and a gain on sale of $3.2 million was recognized for the three months ended March 31, 2020. At March 31, 2021, the remaining associated machinery and equipment that was classified as held for sale with a net book value of $0.3 million as of December 31, 2020, was fully impaired as there is no longer an expected market value for these assets. This is classified as impairment charges on the Consolidated Statements of Operations. The land and buildings associated with TMS are classified as property, plant and equipment, net on the Consolidated Balance Sheets, as it is not probable that these assets will be sold within the next 12 months.
Small-Diameter Seamless Mechanical Tubing Machinery and Equipment
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 products. As a result, the Company recognized accelerated depreciation of $1.5 million for the three months ended March 31, 2021 in alignment with the ramp down of the machinery and equipment used in the manufacturing of these specific products, which was completed in the first quarter of 2021. Spare parts related to this machinery and equipment of $0.5 million was also written down in the first quarter of 2021, as management determined there was no alternative use.
Harrison Melt and Casting Assets On February 16, 2021, management announced a plan to indefinitely idle its Harrison melt and casting assets, which was completed in the first quarter of 2021. Going forward, all of the Company’s melt and casting activities will take place at the Faircrest location. The Company worked collaboratively with employees, suppliers and a number of customers to ensure a well-organized and efficient transition. The Company’s rolling and finishing operations at Harrison were not impacted by this action. The Company recognized non-cash charges of $9.5 million related to the write-down of the associated Harrison melt and casting assets in the first quarter of 2021. These charges include $7.9 million related to the impairment of the associated machinery and equipment, which is classified as impairment charges on the Consolidated Statements of Operations, as well as a write-down of spare parts of $1.6 million, as management determined there was no alternative use. The Company did not incur any cash expenditures related to these charges. TimkenSteel (Shanghai) Corporation Limited
On March 31, 2021, the Company entered into an agreement pursuant to which Daido Steel (Shanghai) Co., Ltd. has agreed to acquire all of the Company’s ownership interest in TimkenSteel (Shanghai) Corporation Limited in an all-cash transaction for approximately $7 million, subject to certain regulatory approvals and other closing conditions. As of March 31, 2021, the Company does not expect a material impact to our Consolidated Statements of Operations. The transaction is expected to close during the third quarter of 2021.
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Other (Income) Expense, Net |
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| Other (Income) Expense, Net |
Note 6 – Other (Income) Expense, net The following table provides the components of other (income) expense, net for the three months ended March 31, 2021 and 2020:
Non-service related pension and other postretirement benefit income, for all years, consists of the interest cost, expected return on plan assets and amortization components of net periodic cost. 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 2021, the cumulative cost of all lump sum payments exceeded 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 the first quarter of 2021, which resulted in a non-cash loss from remeasurement of $0.2 million. A full remeasurement of the pension obligations and plan assets associated with the Salaried Plan was also required in the first quarter of 2020 resulting in a non-cash loss from remeasurement of $9.5 million for the three months ended March 31, 2020. For more details on the remeasurement, refer to “Note 11 - Retirement and Postretirement Plans”. |
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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.
Due to TimkenSteel’s historical operating performance in the U.S., 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.
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Earnings (Loss) Per Share |
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| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 issuance costs) 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 amounted to 5.1 million shares and 4.1 million shares as of March 31, 2021 and March 31, 2020, respectively. As of March 31, 2021, 2.3 million shares primarily related to options with exercise prices more than the average market price of our common shares (i.e., “underwater” options) were excluded from the computation of diluted earnings (loss) per share because the effect of their inclusion would have been anti-dilutive. The difference between the remaining 2.8 million shares assumed issued and the 1.6 million shares assumed purchased with potential proceeds were included in the denominator of the diluted earnings (loss) per share calculation. All common share equivalents for shares issuable for equity-based awards were excluded from the computation of diluted earnings (loss) per share for the three months ended March 31, 2020 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 included in the computation of diluted earnings (loss) per share for the three months ended March 31, 2021 as these shares would be 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 months ended March 31, 2020 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 months ended March 31, 2021 and 2020:
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Inventories |
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| Inventories |
Note 9 - Inventories The components of inventories, net of reserves as of March 31, 2021 and December 31, 2020 were as follows:
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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, 2020. The following table summarizes the current and non-current debt as of March 31, 2021 and December 31, 2020.
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. As of March 31, 2021, the amount available under the Amended Credit Agreement was $241.8 million, reflective of the Company’s asset borrowing base with no outstanding borrowings. Additionally, the Company is in compliance with all covenants outlined in the Amended Credit Agreement. Convertible Senior Notes due 2021 The components of the Convertible Senior Notes due 2021 as of March 31, 2021 and December 31, 2020 were as follows:
The principal amount of the outstanding Convertible Senior Notes due 2021 as of March 31, 2021 is $40.2 million. Transaction costs related to the outstanding Convertible Senior Notes due 2021 were $1.4 million. These costs are amortized to interest expense over the term of the notes. The Convertible Senior Notes due 2021 mature on June 1, 2021. The Convertible Senior Notes due 2021 are currently convertible at the option of holders into a combination of the Company’s common shares and cash, up until the close of business on the business day immediately preceding the maturity date; upon maturity, the Convertible Senior Notes due 2021 remaining outstanding will be settled in cash. For details regarding conversion mechanics and method of settlement, refer to the Indenture for the Convertible Senior Notes due 2021 filed as an exhibit to a Form 8-K on May 31, 2016 and incorporated by reference in our most recent 10-K filing. The Convertible Senior Notes due 2021 are classified as a current liability in the Consolidated Balance Sheets as of March 31, 2021. Convertible Senior Notes due 2025 The components of the Convertible Senior Notes due 2025 as of March 31, 2021 and December 31, 2020 were as follows:
The principal amount of the Convertible Senior Notes due 2025 as of March 31, 2021 is $46.0 million. Transaction costs related to the Convertible Senior Notes due 2025 were $1.5 million. These costs are amortized to interest expense over the term of the notes. The Convertible Senior Notes due 2025 mature on December 1, 2025. The Convertible Senior Notes due 2025 are convertible at the option of holders in certain circumstances and during certain periods into the Company’s common shares, cash, or a combination thereof, at the Company’s election. For details regarding conversion mechanics and method of settlement, refer to the Indenture for the Convertible Senior Notes due 2025 filed as an exhibit to a Form 8-K on December 15, 2020 and incorporated by reference in our most recent 10-K filing. The Convertible Senior Notes due 2025 are classified as a non-current liability in the Consolidated Balance Sheets as of March 31, 2021.
Convertible Notes Interest Expense
The following table sets forth total interest expense recognized related to the Convertible Notes:
Fair Value Measurement The fair value of the Convertible Senior Notes due 2021 was approximately $40.8 million as of March 31, 2021. The fair value of the Convertible Senior Notes due 2021, which falls within Level 1 of the fair value hierarchy as defined by applicable accounting guidance, is based on the price traded closest to March 31, 2021. The fair value of the Convertible Senior Notes due 2025 was approximately $77.2 million as of March 31, 2021. The fair value of the Convertible Senior Notes due 2025, which falls within Level 1 of the fair value hierarchy as defined by applicable accounting guidance, is based on the last price traded in March 2021. TimkenSteel’s Credit Facility is variable-rate debt. As such, any outstanding 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. There were no outstanding borrowings on the Credit Facility as of March 31, 2021. Cash Interest Paid The total cash interest paid for the three months ended March 31, 2021 and 2020 was $0.3 million and $0.8 million, respectively.
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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 months ended March 31, 2021 and 2020 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 2021, the cumulative cost of all lump sum payments exceeded 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 the first quarter of 2021, which resulted in a non-cash loss from remeasurement of $0.2 million. A full remeasurement of the pension obligations and plan assets associated with the Salaried Plan was also required in the first quarter of 2020, resulting in a non-cash loss from remeasurement of $9.5 million for the three months ended March 31, 2020.
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Stock-Based Compensation |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
| Stock-Based Compensation |
Note 12 – Stock-Based Compensation During the first quarter of 2021, the Board of Directors granted 797,320 time-based restricted stock units and 651,240 performance-based restricted stock units, which includes the annual grant to our employees, as well as the inducement grant made to our newly hired CEO in January 2021. There were no stock option grants in the first quarter of 2021. Time-based 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 three months ended March 31, 2021 was $6.79 per share. Performance-based restricted stock units issued in 2021 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-based restricted stock units granted during the three months ended March 31, 2021 was $7.57 per share. TimkenSteel recognized stock-based compensation expense of $1.8 million and $2.0 million for the three months ended March 31, 2021 and 2020, respectively. Future stock-based compensation expense regarding the unvested portion of all awards is approximately $15.2 million. The future expense is expected to be recognized over the remaining vesting periods through 2024. |
Accumulated Other Comprehensive Income (Loss) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) |
Note 13 - Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2021 and 2020 by component were as follows:
The amount reclassified from accumulated other comprehensive income (loss) in the three months ended March 31, 2021 and 2020 for the pension and postretirement liability adjustment was included in other (income) expense, net in the unaudited Consolidated Statements of Operations. |
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Contingencies |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| 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 March 31, 2021 and December 31, 2020, TimkenSteel had a $0.9 million and a $1.0 million contingency reserve, respectively, related to loss exposures incurred in the ordinary course of business
|
Subsequent Events |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Subsequent Events [Abstract] | |
| Subsequent Events |
Note 15 – Subsequent Events
Effective May 7, 2021, Thomas D. Moline, executive vice president of commercial operations, and William P. Bryan, executive vice president of manufacturing and supply chain, will leave the company. Kevin A. Raketich, currently serving as executive vice president of strategy and corporate development at TimkenSteel, will assume a new role as executive vice president of sales, marketing, and business development. In connection with these leadership changes, the Company is expecting to recognize severance and transition charges of approximately $2.1 million in the second quarter of 2021, of which approximately $1.3 million will be a cash charge. |
Recent Accounting Pronouncements (Policies) |
3 Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||
| 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 2021.
Upon adoption of ASU 2020-06 prospectively as of January 1, 2021, all outstanding Convertible Notes are now fully classified as a liability, there is no longer a separate equity component and the Convertible Notes will no longer have a debt discount that is amortized. This resulted in a decrease of $10.6 million to additional paid-in capital and an increase of $1.1 million and $5.3 million to current convertible notes, net and non-current convertible notes, net, respectively, on the Consolidated Balance Sheets as of January 1, 2021. Additionally, retained deficit was reduced by $4.2 million in the Consolidated Balance Sheets as of January 1, 2021 to remove amortization expense recognized in prior periods. The adoption of this standard did not have an effect on the Company’s cash flows, liquidity, and the methodology used for the earnings per share calculation. Refer to “Note 10 – Financing Arrangements” for additional information on the Company’s Convertible Notes. There are no current ASUs issued, but not adopted, that will have an impact on the Company. |
Revenue Recognition (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue From Contract With Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of Revenue |
The following table provides the major sources of revenue by end-market sector for the three months ended March 31, 2021 and 2020:
(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 months ended March 31, 2021 and 2020:
(2) “Other” sales by product type includes the Company’s scrap sales.
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Restructuring Charges (Tables) |
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring And Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Restructuring Reserve |
The following is a summary of the restructuring reserve for the three months ended March 31, 2021 and 2020.
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Other (Income) Expense, Net (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Income And Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other (Income) Expense, Net |
The following table provides the components of other (income) expense, net for the three months ended March 31, 2021 and 2020:
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Income Tax Provision (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of (Benefit) Provision for Income Taxes |
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Earnings (Loss) Per Share (Tables) |
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 and diluted earnings (loss) per share for the three months ended March 31, 2021 and 2020:
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Inventories (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Components of Inventory |
The components of inventories, net of reserves as of March 31, 2021 and December 31, 2020 were as follows:
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Financing Arrangements (Tables) |
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Current and Non-current Debt |
The following table summarizes the current and non-current debt as of March 31, 2021 and December 31, 2020.
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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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| Convertible Senior Notes due 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Components of Convertible Notes |
The components of the Convertible Senior Notes due 2021 as of March 31, 2021 and December 31, 2020 were as follows:
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| Convertible Senior Notes due 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Components of Convertible Notes |
The components of the Convertible Senior Notes due 2025 as of March 31, 2021 and December 31, 2020 were as follows:
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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 months ended March 31, 2021 and 2020 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 three months ended March 31, 2021 and 2020 by component were as follows:
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Revenue Recognition (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Disaggregation of Revenue [Line Items] | ||
| Net sales | $ 273.6 | $ 259.7 |
| Bar | ||
| Disaggregation of Revenue [Line Items] | ||
| Net sales | 173.2 | 168.1 |
| Tube | ||
| Disaggregation of Revenue [Line Items] | ||
| Net sales | 36.1 | 30.4 |
| Value-add | ||
| Disaggregation of Revenue [Line Items] | ||
| Net sales | 56.7 | 55.5 |
| Other | ||
| Disaggregation of Revenue [Line Items] | ||
| Net sales | 7.6 | 5.7 |
| Mobile | ||
| Disaggregation of Revenue [Line Items] | ||
| Net sales | 133.6 | 97.7 |
| Industrial | ||
| Disaggregation of Revenue [Line Items] | ||
| Net sales | 124.7 | 113.3 |
| Energy | ||
| Disaggregation of Revenue [Line Items] | ||
| Net sales | 7.7 | 25.2 |
| Other | ||
| Disaggregation of Revenue [Line Items] | ||
| Net sales | $ 7.6 | $ 23.5 |
Restructuring Charges - Narrative (Details) $ in Millions |
3 Months Ended | 27 Months Ended | |
|---|---|---|---|
|
Mar. 31, 2021
USD ($)
Position
|
Mar. 31, 2020
USD ($)
|
Mar. 31, 2021
USD ($)
Position
|
|
| Restructuring And Related Activities [Abstract] | |||
| Number of positions eliminated | Position | 15 | 230 | |
| Restructuring charges | $ 0.5 | $ 0.6 | $ 12.2 |
| Restructuring charges related to transition of customers to other manufacturing equipment | 0.3 | ||
| Restructuring charges related to severance and employee-related benefits | $ 0.2 | ||
Restructuring Charges - Summary of Restructuring Reserve (Details) - USD ($) $ in Millions |
3 Months Ended | 27 Months Ended | |
|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2021 |
|
| Restructuring Reserve [Roll Forward] | |||
| Beginning balance | $ 1.5 | $ 6.0 | |
| Expenses | 0.5 | 0.6 | $ 12.2 |
| Payments | (1.4) | (4.0) | |
| Ending balance | $ 0.6 | $ 2.6 | $ 0.6 |
Other (Income) Expense, Net (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Other Income And Expenses [Abstract] | ||
| Pension and postretirement non-service benefit (income) loss | $ (9.6) | $ (6.6) |
| Loss (gain) from remeasurement of benefit plans | 0.2 | 9.5 |
| Miscellaneous (income) expense | (0.2) | |
| Total other (income) expense, net | $ (9.4) | $ 2.7 |
Other (Income) Expense, Net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Other Income And Expenses [Abstract] | ||
| Loss from remeasurement of benefit plans | $ 0.2 | $ 9.5 |
Income Tax Provision - Schedule of (Benefit) Provision for Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Income Tax Disclosure [Abstract] | ||
| Provision (benefit) for income taxes | $ 0.2 | $ 0.1 |
| Effective tax rate | 2.00% | (0.50%) |
Earnings (Loss) Per Share - Additional Information (Details) - shares shares in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
| Shares assumed issued | 2.8 | |
| Shares assumed purchased with potential proceeds | 1.6 | |
| Underwater Options [Member] | ||
| Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
| Antidilutive securities excluded from calculation of computation of diluted earnings (loss) per share | 2.3 | |
| Equity-based Awards [Member] | ||
| Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
| Antidilutive securities excluded from calculation of computation of diluted earnings (loss) per share | 5.1 | 4.1 |
Earnings (Loss) Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Numerator: | ||
| Net income (loss), basic | $ 9.8 | $ (19.9) |
| Add convertible notes interest | 1.3 | |
| Net income (loss), diluted | $ 11.1 | $ (19.9) |
| Denominator: | ||
| Weighted average shares outstanding, basic (in shares) | 45.4 | 44.9 |
| Dilutive effect of stock-based awards (in shares) | 1.2 | |
| Dilutive effect of convertible notes (in shares) | 9.1 | |
| Weighted average shares outstanding, diluted (in shares) | 55.7 | 44.9 |
| Basic earnings (loss) per share (in dollars per share) | $ 0.22 | $ (0.44) |
| Diluted earnings (loss) per share (in dollars per share) | $ 0.20 | $ (0.44) |
Inventories - Schedule of Inventory (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Manufacturing supplies | $ 28.5 | $ 37.6 |
| Raw materials | 25.1 | 20.0 |
| Work in process | 99.5 | 79.1 |
| Finished products | 58.2 | 55.6 |
| Gross inventory | 211.3 | 192.3 |
| Allowance for inventory reserves | (8.6) | (13.9) |
| Total inventories, net | $ 202.7 | $ 178.4 |
Financing Arrangements - Summary of Current and Non-current Debt (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Debt Instrument [Line Items] | ||
| Total debt | $ 84.9 | $ 78.2 |
| Less current portion of debt | 40.2 | 38.9 |
| Total non-current portion of debt | 44.7 | 39.3 |
| Convertible Senior Notes due 2021 | ||
| Debt Instrument [Line Items] | ||
| Total debt | 40.2 | 38.9 |
| Convertible Senior Notes due 2025 | ||
| Debt Instrument [Line Items] | ||
| Total debt | $ 44.7 | $ 39.3 |
Financing Arrangements - Narrative (Details) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
| Debt Instrument [Line Items] | |||
| Interest paid | $ 300,000 | $ 800,000 | |
| Third Amended Credit Facility | Credit Agreement | |||
| Debt Instrument [Line Items] | |||
| Amount available under amended credit agreement | 241,800,000 | ||
| Outstanding borrowings | 0 | ||
| Convertible Senior Notes due 2021 | |||
| Debt Instrument [Line Items] | |||
| Principal amount | 40,200,000 | $ 40,200,000 | |
| Transaction costs, debt | $ 1,400,000 | 100,000 | |
| Maturity date | Jun. 01, 2021 | ||
| Terms of conversion | The Convertible Senior Notes due 2021 are currently convertible at the option of holders into a combination of the Company’s common shares and cash, up until the close of business on the business day immediately preceding the maturity date; upon maturity, the Convertible Senior Notes due 2021 remaining outstanding will be settled in cash. | ||
| Fair value of convertible notes | $ 40,800,000 | ||
| Convertible Senior Notes due 2025 | |||
| Debt Instrument [Line Items] | |||
| Outstanding borrowings | 0 | ||
| Principal amount | 46,000,000.0 | 46,000,000.0 | |
| Transaction costs, debt | $ 1,300,000 | $ 1,300,000 | |
| Maturity date | Dec. 01, 2025 | ||
| Terms of conversion | The Convertible Senior Notes due 2025 are convertible at the option of holders in certain circumstances and during certain periods into the Company’s common shares, cash, or a combination thereof, at the Company’s election. | ||
| Transaction costs, debt gross | $ 1,500,000 | ||
| Fair value of convertible notes | $ 77,200,000 | ||
Financing Arrangements - Schedule of Convertible Debt (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Debt Instrument [Line Items] | ||
| Total debt | $ 84.9 | $ 78.2 |
| Convertible Senior Notes due 2021 | ||
| Debt Instrument [Line Items] | ||
| Principal | 40.2 | 40.2 |
| Less: Debt issuance costs, net of amortization | (1.4) | (0.1) |
| Less: Debt discount, net of amortization | (1.2) | |
| Total debt | 40.2 | 38.9 |
| Convertible Senior Notes due 2025 | ||
| Debt Instrument [Line Items] | ||
| Principal | 46.0 | 46.0 |
| Less: Debt issuance costs, net of amortization | (1.3) | (1.3) |
| Less: Debt discount, net of amortization | (5.4) | |
| Total debt | $ 44.7 | $ 39.3 |
Financing Arrangements - Schedule of Interest Expense (Details) - Convertible Notes - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Debt Instrument [Line Items] | ||
| Contractual interest expense | $ 1.2 | $ 1.3 |
| Amortization of debt issuance costs | 0.1 | 0.1 |
| Amortization of debt discount | 1.1 | |
| Total | $ 1.3 | $ 2.5 |
Retirement and Postretirement Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Pension | ||
| Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
| Service cost | $ 4.4 | $ 4.9 |
| Interest cost | 9.1 | 10.9 |
| Expected return on plan assets | (17.2) | (16.2) |
| Amortization of prior service cost | 0.1 | 0.1 |
| Net remeasurement losses | 0.2 | 9.5 |
| Net Periodic Benefit Cost (Income) | (3.4) | 9.2 |
| Postretirement | ||
| Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
| Service cost | 0.3 | 0.3 |
| Interest cost | 0.8 | 1.0 |
| Expected return on plan assets | (0.9) | (0.9) |
| Amortization of prior service cost | (1.5) | (1.5) |
| Net Periodic Benefit Cost (Income) | $ (1.3) | $ (1.1) |
Retirement and Postretirement Plans - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Pension | ||
| Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
| Loss from remeasurement of benefit plans | $ 0.2 | $ 9.5 |
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Stock options, shares granted | 0 | |
| Stock-based compensation expense | $ 1.8 | $ 2.0 |
| Future stock-based compensation expense | $ 15.2 | |
| Restricted Stock Units | ||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Shares granted | 797,320 | |
| Weighted average fair value of shares granted | $ 6.79 | |
| Performance Shares | ||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Shares granted | 651,240 | |
| Weighted average fair value of shares granted | $ 7.57 | |
Contingencies - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Loss Contingency Accrual Disclosures [Abstract] | ||
| Contingency reserves | $ 0.9 | $ 1.0 |
Subsequent Events - Narrative (Details) - Forecast $ in Millions |
3 Months Ended |
|---|---|
|
Jun. 30, 2021
USD ($)
| |
| Subsequent Event [Line Items] | |
| Severance and transition charges | $ 2.1 |
| Severance and transition cash charge | $ 1.3 |