TIMKENSTEEL CORP, 10-Q filed on 10/26/2017
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2017
Oct. 13, 2017
Document and Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2017 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q3 
 
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
 
44,441,647 
Consolidated Statements of Operations (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Income Statement [Abstract]
 
 
 
 
Net sales
$ 339.1 
$ 213.8 
$ 987.8 
$ 654.8 
Cost of products sold
320.6 
206.3 
928.5 
629.6 
Gross Profit
18.5 
7.5 
59.3 
25.2 
Selling, general and administrative expenses
22.5 
21.8 
67.7 
66.8 
Restructuring charges
0 
0 
0 
0.3 
Operating Loss
(4.0)
(14.3)
(8.4)
(41.9)
Interest expense
3.7 
3.9 
11.0 
8.0 
Other income (expense), net
1.9 
(17.3)
10.7 
(12.1)
Loss Before Income Taxes
(5.8)
(35.5)
(8.7)
(62.0)
Provision (benefit) for income taxes
0.1 
(13.3)
1.2 
(23.5)
Net Loss
$ (5.9)
$ (22.2)
$ (9.9)
$ (38.5)
Per Share Data:
 
 
 
 
Basic loss per share (in dollars per share)
$ (0.13)
$ (0.50)
$ (0.22)
$ (0.87)
Diluted loss per share (in dollars per share)
$ (0.13)
$ (0.50)
$ (0.22)
$ (0.87)
Dividends per share (in dollars per share)
$ 0.00 
$ 0.00 
$ 0.00 
$ 0.00 
Consolidated Statements of Comprehensive Loss (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net Loss
$ (5.9)
$ (22.2)
$ (9.9)
$ (38.5)
Other comprehensive income, net of tax:
 
 
 
 
Foreign currency translation adjustments
0.3 
(0.5)
1.1 
(2.8)
Pension and postretirement liability adjustments
0.1 
0 
0.4 
0.8 
Other comprehensive income, net of tax
0.4 
(0.5)
1.5 
(2.0)
Comprehensive Loss, net of tax
$ (5.5)
$ (22.7)
$ (8.4)
$ (40.5)
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Current Assets
 
 
Cash and cash equivalents
$ 25.8 
$ 25.6 
Accounts receivable, net of allowances (2017 - $2.6 million; 2016 - $2.1 million)
160.6 
91.6 
Inventories, net
219.5 
164.2 
Deferred charges and prepaid expenses
4.2 
2.8 
Other current assets
7.4 
6.2 
Total Current Assets
417.5 
290.4 
Property, Plant and Equipment, Net
701.6 
741.9 
Pension assets
9.8 
6.2 
Intangible assets, net
20.9 
25.0 
Other non-current assets
6.0 
6.4 
Total Other Assets
36.7 
37.6 
Total Assets
1,155.8 
1,069.9 
Current Liabilities
 
 
Accounts payable, trade
133.8 
87.0 
Salaries, wages and benefits
30.4 
20.3 
Accrued pension and postretirement costs
3.0 
3.0 
Other current liabilities
21.4 
20.4 
Total Current Liabilities
188.6 
130.7 
Non-Current Liabilities
 
 
Convertible notes, net
69.2 
66.4 
Other long-term debt
95.2 
70.2 
Accrued pension and postretirement costs
196.2 
192.1 
Deferred income taxes
0.7 
0 
Other non-current liabilities
13.2 
13.1 
Total Non-Current Liabilities
374.5 
341.8 
Shareholders’ Equity
 
 
Preferred shares, without par value; authorized 10.0 million shares, none issued
0 
0 
Common shares, without par value; authorized 200.0 million shares; issued 2017 and 2016 - 45.7 million shares
0 
0 
Additional paid-in capital
842.3 
845.6 
Retained deficit
(204.1)
(193.9)
Treasury shares - 2017 - 1.3 million; 2016 - 1.5 million
(37.6)
(44.9)
Accumulated other comprehensive loss
(7.9)
(9.4)
Total Shareholders’ Equity
592.7 
597.4 
Total Liabilities and Shareholders’ Equity
$ 1,155.8 
$ 1,069.9 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Statement of Financial Position [Abstract]
 
 
Allowances for accounts receivable
$ 2.6 
$ 2.1 
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)
1,300,000 
1,500,000 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Operating Activities
 
 
Net Loss
$ (9.9)
$ (38.5)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
Depreciation and amortization
56.4 
56.2 
Amortization related to other long-term debt
3.1 
1.9 
Impairment charges and loss on sale or disposal of assets
0.4 
1.0 
Deferred income taxes
0.7 
(24.9)
Stock-based compensation expense
4.9 
4.6 
Pension and postretirement expense
4.6 
23.4 
Pension and postretirement contributions and payments
(2.5)
(3.1)
Reimbursement from postretirement plan assets
0 
13.3 
Changes in operating assets and liabilities:
 
 
Accounts receivable, net
(69.0)
(23.0)
Inventories, net
(55.3)
18.5 
Accounts payable, trade
46.8 
23.6 
Other accrued expenses
10.7 
(8.4)
Deferred charges and prepaid expenses
(1.4)
7.6 
Other, net
(1.2)
3.3 
Net Cash (Used) Provided by Operating Activities
(11.7)
55.5 
Investing Activities
 
 
Capital expenditures
(11.9)
(26.1)
Net Cash Used by Investing Activities
(11.9)
(26.1)
Financing Activities
 
 
Proceeds from exercise of stock options
0.2 
0 
Shares surrendered for employee taxes on stock compensation
(1.4)
0 
Credit agreement repayments
(5.0)
(130.0)
Credit agreement borrowings
30.0 
0 
Debt issuance costs
0 
(4.8)
Proceeds from issuance of convertible notes
0 
86.3 
Net Cash Provided (Used) by Financing Activities
23.8 
(48.5)
Effect of exchange rate changes on cash
0 
0 
Increase (Decrease) In Cash and Cash Equivalents
0.2 
(19.1)
Cash and cash equivalents at beginning of period
25.6 
42.4 
Cash and Cash Equivalents at End of Period
$ 25.8 
$ 23.3 
Company and Basis of Presentation
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, 2016.
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) and value-add solutions, such as precision steel components. In addition, TimkenSteel supplies machining and thermal treatment services, as well as manages raw material recycling programs, which 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 and tubes production processes take place at the Company’s Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars and seamless mechanical tubes 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.
Change in Accounting Principle
On December 31, 2016, TimkenSteel changed its accounting principle for recognizing actuarial gains and losses and expected returns on plan assets for its defined benefit pension and other postretirement benefit plans. Prior to 2016, the Company amortized, as a component of pension and other postretirement expense, unrecognized actuarial gains and losses (included within accumulated other comprehensive income (loss)) over the average remaining service period of active employees expected to receive benefits under the plan, or average remaining life expectancy of inactive participants when all or almost all of plan participants are inactive. The Company historically has calculated the market-related value of plan assets based on a 5-year market adjustment. The value was determined by adjusting the fair value of plan assets to reflect the investment gains and losses during each of the last 5 years. The difference between the expected return on assets and actual return on assets was recognized at the rate of 20% per year (e.g., recognized over five years). Under the new principle, actuarial gains and losses are immediately recognized through net periodic benefit cost in the Statement of Operations upon the annual remeasurement at December 31, or on an interim basis as triggering events warrant remeasurement. In addition, the Company changed its accounting for measuring the market-related value of plan assets from a calculated amount (based on a five-year smoothing of asset returns) to fair value. The Company believes these changes are preferable, as they result in an accelerated recognition of changes in assumptions and market return on plan assets, as compared to the minimum amortization approach and market-related value of plan assets (i.e. delayed approach). Additionally, the Company believes the new accounting principles provide a better representation of the operating results of the Company and the impact of its benefit obligations (through the income statement) in the period when changes occur.
These changes have been applied retrospectively to prior periods beginning with the formation of the TimkenSteel pension and postretirement benefit plans during the second quarter of 2014. The cumulative effect of the change in accounting principles resulted in a reduction of additional paid in capital of $229.4 million per year as of the date of establishment of the TimkenSteel pension and other postretirement plans. For further information refer to our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC.
Recent Accounting Pronouncements
Recent Accounting Pronouncements
Recent Accounting Pronouncements
Adoption of New Accounting Standards
The Company adopted the following Accounting Standard Updates (ASU) during the nine months ended September 30, 2017. With the exception of ASU 2017-07, 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.
Standard
 
 
 
2015-11
Inventory: Simplifying the Measurement of Inventory (Topic 330)
2016-15
Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force)
2016-16
 Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740)
2017-07
Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715)


In the first quarter of 2017, the FASB issued and the Company early adopted ASU 2017-07, “Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715).” This ASU requires entities to present non-service cost components of net periodic benefit cost in a caption below operating loss and provides that only service cost is eligible to be capitalized in inventory or construction of an asset. This ASU requires retrospective application of the change in the statement of operations and prospective application for the capitalization of service cost in assets. This ASU permits previously disclosed components of net periodic benefit costs as an estimation basis for applying the retrospective presentation as a practical expedient. Utilizing the practical expedient approach, based on amounts previously disclosed, the Company reclassified non-service components of net periodic benefit cost from cost of products sold and selling, general and administrative expenses, respectively, into other income (expense), net on the Unaudited Consolidated Statements of Operations. See Note 9 - Retirement and Postretirement Plans for additional information.

Accounting Standards Issued But Not Yet Adopted
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. This ASU eliminates the requirement to consider “down round” features when determining whether certain equity-linked financial instruments or embedded features are indexed to an entity’s own stock. It is effective for annual periods beginning after December 31, 2018. Early adoption is permitted. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In May 2017, the FASB issued ASU 2017-09, Compensation — Stock Compensation (Topic 718), Scope of Modification Accounting. This ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. This ASU shall be applied prospectively to awards modified on or after the adoption date. It is effective for annual periods beginning after December 31, 2017. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. TimkenSteel will apply this ASU for awards modified on or after January 1, 2018, as applicable. TimkenSteel does not expect this ASU to have a material impact on its results of operations or financial condition.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations - Clarifying the Definition of a Business.” This guidance clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. It is effective for annual periods beginning after December 31, 2017. TimkenSteel will apply this ASU to business combinations effective after January 1, 2018, as applicable.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU changes how entities will measure credit losses for most financial assets, including trade and other receivables. This guidance will replace the current incurred loss approach with an expected loss model. It is effective for annual periods beginning after December 31, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018 and interim periods therein. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize lease liabilities and right-of-use assets on the balance sheet for operating leases, and requires additional quantitative and qualitative disclosures. It is effective for annual reporting periods beginning after December 15, 2018. The Company regularly enters into operating leases. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition and will supersede Topic 605, “Revenue Recognition,” and most industry-specific guidance. Under ASU 2014-09 and the subsequently issued amendments, the core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Additional disclosures will be required about the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. This standard is effective for reporting periods after December 15, 2017. TimkenSteel has substantially completed a review of its customer contracts and has preliminarily determined that its revenue transactions will continue to be recognized at a point in time. Based on the analysis completed to date, the Company’s expectation is that this standard will not materially impact the amount or timing of revenue recognized. The Company is finalizing its review of accounting policies, systems and related internal controls in anticipation of adopting ASU 2014-09 as of January 1, 2018, using the modified retrospective approach.
Inventories
Inventories
Inventories
The components of inventories, net as of September 30, 2017 and December 31, 2016 were as follows:
 
September 30,
2017
 
December 31,
2016
Inventories, net:
 
 
 
Manufacturing supplies

$36.6

 

$37.9

Raw materials
31.7

 
16.2

Work in process
96.3

 
58.6

Finished products
63.5

 
59.6

Subtotal
228.1

 
172.3

Allowance for surplus and obsolete inventory
(8.6
)
 
(8.1
)
Total Inventories, net

$219.5

 

$164.2


Inventories are valued at the lower of cost or market, with approximately 64% 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.
The LIFO reserve as of September 30, 2017 and December 31, 2016 was $53.5 million and $44.6 million, respectively. TimkenSteel projects that its LIFO reserve will increase for the year ending December 31, 2017 due primarily to higher anticipated raw material costs and inventory quantities.
Property, Plant and Equipment
Property, Plant and Equipment
Property, Plant and Equipment
The components of property, plant and equipment, net as of September 30, 2017 and December 31, 2016, were as follows:
 
September 30,
2017
 
December 31,
2016
Property, Plant and Equipment, net:
 
 
 
Land

$13.4

 

$13.3

Buildings and improvements
418.9

 
420.6

Machinery and equipment
1,354.1

 
1,352.0

Construction in progress
51.6

 
63.9

Subtotal
1,838.0

 
1,849.8

Less allowances for depreciation
(1,136.4
)
 
(1,107.9
)
Property, Plant and Equipment, net

$701.6

 

$741.9


Total depreciation expense was $51.3 million and $51.0 million for the nine months ended September 30, 2017 and 2016, respectively. TimkenSteel recorded capitalized interest related to construction projects of $0.5 million in both the nine months ended September 30, 2017 and 2016. During the nine months ended September 30, 2017, TimkenSteel recorded impairment charges of $0.4 million in the caption cost of products sold on the Unaudited Consolidated Statements of Operations, related to the discontinued use of certain assets. There were no impairment charges recorded during the nine months ended September 30, 2016.
Intangible Assets
Intangible Assets
Intangible Assets
The components of intangible assets, net as of September 30, 2017 and December 31, 2016 were as follows:
 
September 30, 2017
 
December 31, 2016
 
Gross Carrying Amount
 
 Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
 Accumulated Amortization
 
Net Carrying Amount
Intangible Assets Subject to Amortization:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships

$6.3

 

$4.0

 

$2.3

 

$6.3

 

$3.7

 

$2.6

Technology use
9.0

 
5.8

 
3.2

 
9.0

 
5.2

 
3.8

Capitalized software
58.5

 
43.1

 
15.4

 
58.9

 
40.3

 
18.6

Total Intangible Assets

$73.8

 

$52.9

 

$20.9

 

$74.2

 

$49.2

 

$25.0


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 nine months ended September 30, 2017 and 2016 was $5.1 million and $5.2 million, respectively.
Financing Arrangements
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 Amended Credit Agreement.
The components of the Convertible Notes as of September 30, 2017 and December 31, 2016 were as follows:
 
September 30,
2017
 
December 31,
2016
Principal

$86.3

 

$86.3

Less: Debt issuance costs, net of amortization
(1.8
)
 
(2.1
)
Less: Debt discount, net of amortization
(15.3
)
 
(17.8
)
Convertible notes, net

$69.2

 

$66.4


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:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
2016
Contractual interest expense

$1.3

 

$1.3

 

$3.9


$1.7

Amortization of debt issuance costs
0.1

 
0.1

0.1

0.3

0.2

Amortization of debt discount
0.9

 
0.7

 
2.5

0.9

Total

$2.3

 

$2.1

 

$6.7


$2.8


The fair value of the Convertible Notes was approximately $162.8 million as of September 30, 2017. 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 September 2017 .
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 September 30, 2017 and December 31, 2016 were as follows:
 
September 30,
2017
 
December 31,
2016
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017)

$12.2

 

$12.2

Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017)
9.5

 
9.5

Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.862% as of September 30, 2017)
8.5

 
8.5

Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
65.0

 
40.0

Total Other Long-Term Debt

$95.2

 

$70.2


Amended Credit Agreement
On February 26, 2016, the Company, as borrower, and certain domestic subsidiaries, as subsidiary guarantors, entered into Amendment No. 1 to the Amended and Restated Credit Agreement (as amended by the Amendment, the Amended Credit Agreement) with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto.
The Amended Credit Agreement provides for a $265.0 million asset-based revolving credit facility, including a $13.3 million sublimit for the issuance of commercial and standby letters of credit, and a $26.5 million sublimit for swingline loans. The availability of borrowings is subject to a borrowing base calculation based upon a valuation of the eligible accounts receivable, inventory and machinery and equipment of TimkenSteel and the subsidiary guarantors, each multiplied by an applicable advance rate. The Amended Credit Agreement includes a block on availability equal to the greater of $28.9 million or 12.5% of the aggregate commitments (except that in the event of a mandatory reduction in the commitments, the block on availability will be equal to the greater of $20.0 million or 12.5% of the aggregate commitments), effectively reducing the Company’s borrowing base by the availability block.
The Amended Credit Agreement contains certain customary covenants, including covenants that limit TimkenSteel’s and its subsidiaries’ ability 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 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. Further, the Amended Credit Agreement contains financial covenants that (i) limit the amount of capital expenditures TimkenSteel may make to $45.0 million in fiscal year 2016 and $50.0 million in fiscal years thereafter and (ii) require the Company to maintain a minimum specified fixed charge coverage ratio for the year-to-date periods beginning January 1, 2017 and ending June 30, 2017, July 31, 2017 and August 31, 2017. As of September 30, 2017, we are in compliance with all covenants.
Borrowings under the Amended Credit Agreement bear interest based on the daily balance outstanding at LIBOR (with no rate floor), plus an applicable margin (varying from 3.00% to 3.50%) and an additional 0.75% on the machinery and equipment component or, in certain cases, an alternate base rate (based on certain lending institutions’ Prime Rate or as otherwise specified in the Amended and Restated Credit Agreement, with no rate floor), plus an applicable margin (varying from 2.00% to 2.50%). The Amended Credit Agreement also carries a commitment fee equal to the unused borrowings multiplied by an applicable margin of 0.50%. The applicable margins are calculated quarterly and vary based on TimkenSteel’s average quarterly availability as set forth in the Amended Credit Agreement. The interest rate under the Amended Credit Agreement was 5.2% as of September 30, 2017. The amount available under the Amended Credit Agreement as of September 30, 2017 was $164.3 million net, after reducing for the block on availability of $33.1 million.
Revenue Refunding Bonds
On June 1, 2014, The Timken Company (Timken) purchased, in lieu of redemption, the State of Ohio Water Development Revenue Refunding Bonds (Water Bonds), State of Ohio Air Quality Development Revenue Refunding Bonds (Air Quality Bonds) and State of Ohio Pollution Control Revenue Refunding Bonds (Pollution Control Bonds) (collectively, Bonds). Pursuant to an Assignment and Assumption Agreement dated June 24, 2014 between Timken and TimkenSteel, Timken assigned all of its right, title and interest in and to the loan agreements and the notes associated with the Bonds to, and these obligations were assumed by, TimkenSteel. Additionally, replacement letters of credit were issued for the Water Bonds and the Pollution Control Bonds. The Bonds were remarketed on June 24, 2014 (Remarketing Date) in connection with the conversion of the interest rate mode for the Bonds to the weekly rate and the delivery of the replacement letters of credit, as applicable. The replacement letters of credit had an initial stated term of one year that, upon request by the Company, and with approval by the issuing bank, can be renewed annually thereafter for subsequent one year terms. 
On September 1, 2016, the Water Bonds were remarketed in connection with the delivery of a replacement letter of credit issued by JP Morgan Chase Bank, N.A. The key terms of the Water Bonds did not change as a result of the remarketing.
As of September 30, 2017, the Company has requested and the issuing banks have approved renewal of the Air Quality Bonds and Pollution Control Bonds through June 2018 and the Water Bonds through August 2018.  TimkenSteel is responsible for payment of the interest and principal associated with the Bonds subsequent to the Remarketing Date.
All of TimkenSteel’s other long-term debt is variable-rate debt. As such, the carrying value of this debt is a reasonable estimate of fair value as interest rates on these borrowings approximate current market rates, which is considered a Level 2 fair value input as defined by Accounting Standard Codification (ASC) 820, Fair Value Measurements. The valuation of Level 2 is based on quoted prices for similar assets and liabilities in active markets that are observable either directly or indirectly.
Advanced Quench-and-Temper Facility
In the second quarter of 2015, TimkenSteel entered into a lease arrangement with the Stark County Port Authority in connection with the construction of a new advanced quench-and-temper facility in Perry Township, Ohio and the issuance of an Industrial Revenue Bond. The bond is held 100% by TimkenSteel Material Services, LLC (a wholly-owned subsidiary of TimkenSteel) and, accordingly, the obligation under the lease agreement and investment in the Industrial Revenue Bond, as well as the related interest income and expense, are eliminated in the Unaudited Consolidated Financial Statements. As of September 30, 2017, $39.6 million has been spent on the new advanced quench-and-temper facility and is reported in property, plant and equipment, net in the Unaudited Consolidated Balance Sheets. Of this amount, $11.8 million has been financed through the lease arrangement described above.
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss for the nine months ended September 30, 2017 and 2016 by component are as follows:
 
Foreign Currency Translation Adjustments
 
Pension and Postretirement Liability Adjustments
 
Total
Balance at December 31, 2016

($7.0
)
 

($2.4
)
 

($9.4
)
Other comprehensive income before reclassifications, before income tax
1.1

 
—

 
1.1

Amounts reclassified from accumulated other comprehensive loss, before income tax
—

 
1.1

 
1.1

Income tax benefit
—

 
(0.7
)
 
(0.7
)
Net current period other comprehensive income, net of income taxes
1.1

 
0.4

 
1.5

Balance at September 30, 2017

($5.9
)
 

($2.0
)
 

($7.9
)

 
Foreign Currency Translation Adjustments
 
Pension and Postretirement Liability Adjustments
 
Total
Balance at December 31, 2015

($5.0
)
 

($2.9
)
 

($7.9
)
Other comprehensive loss before reclassifications, before income tax
(2.8
)
 
—

 
(2.8
)
Amounts reclassified from accumulated other comprehensive loss, before income tax
—

 
1.2

 
1.2

    Income tax benefit
—

 
(0.4
)
 
(0.4
)
Net current period other comprehensive (loss) income, net of income taxes
(2.8
)
 
0.8

 
(2.0
)
Balance as of September 30, 2016

($7.8
)
 

($2.1
)
 

($9.9
)

The amount reclassified from accumulated other comprehensive loss for the pension and postretirement liability adjustment was included in other income (expense), 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
Changes in Shareholders' Equity
Changes in Shareholders' Equity
Changes in the components of shareholders’ equity for the nine months ended September 30, 2017 were as follows:
 
Total
 
Additional Paid-in Capital
 
Retained Deficit
 
Treasury Shares
 
Accumulated Other Comprehensive Loss
Balance at December 31, 2016

$597.4

 

$845.6

 

($193.9
)
 

($44.9
)
 

($9.4
)
Net loss
(9.9
)
 
—

 
(9.9
)
 
—

 
—

Pension and postretirement adjustment, net of tax
0.4

 
—

 
—

 
—

 
0.4

Foreign currency translation adjustments
1.1

 
—

 
—

 
—

 
1.1

Stock-based compensation expense
4.9

 
4.9

 
—

 
—

 
—

Stock option activity
0.2

 
0.2

 
—

 
—

 
—

Issuance of treasury shares
—

 
(8.4
)
 
(0.3
)
 
8.7

 
—

Shares surrendered for taxes
(1.4
)
 
—

 
—

 
(1.4
)
 
—

Balance at September 30, 2017

$592.7

 

$842.3

 

($204.1
)
 

($37.6
)
 

($7.9
)
Retirement and Postretirement Benefits
Retirement and Postretirement Plans
Retirement and Postretirement Plans
The components of net periodic benefit cost for the three and nine months ended September 30, 2017 and 2016 were as follows:
 
Three Months Ended
September 30, 2017
 
Three Months Ended
September 30, 2016
Components of net periodic benefit cost:
Pension
 
Postretirement
 
Pension
 
Postretirement
Service cost

$4.6

 

$0.4

 

$3.9

 

$0.4

Interest cost
12.3

 
2.1

 
13.2

 
2.4

Expected return on plan assets
(17.7
)
 
(1.3
)
 
(18.1
)
 
(1.5
)
Amortization of prior service cost
0.1

 
0.2

 
0.1

 
0.2

Net remeasurement loss
2.3

 
—

 
20.4

 
—

Net Periodic Benefit Cost

$1.6

 

$1.4

 

$19.5

 

$1.5

 
Nine Months Ended
September 30, 2017
 
Nine Months Ended
September 30, 2016
Components of net periodic benefit cost:
Pension
 
Postretirement
 
Pension
 
Postretirement
Service cost

$13.8

 

$1.2

 

$11.7

 

$1.2

Interest cost
36.8

 
6.3

 
39.8

 
7.1

Expected return on plan assets
(52.9
)
 
(4.0
)
 
(53.6
)
 
(4.4
)
Amortization of prior service cost
0.3

 
0.8

 
0.4

 
0.8

Net remeasurement loss
2.3

 
—

 
20.4

 
—

Net Periodic Benefit Cost

$0.3

 

$4.3

 

$18.7

 

$4.7


The service cost component is included in cost of products sold and selling, general and administrative expenses. The non-service cost components of net periodic benefit costs are included in other income (expense), net in the Unaudited Consolidated Statements of Operations. The Company utilized the practical expedient approach, based on amounts previously disclosed, to reclassify non-service components of net periodic benefit cost from cost of products sold and selling, general and administrative expenses, into other income (expense), net on the Unaudited Consolidated Statements of Operations.
The following table sets forth the amounts reclassified into other income (expense), net for the three and nine months ended September 30, 2016.
 
 
Three
 
Nine
 
 
Months ended
September 30, 2016
Cost of products sold
 

($13.3
)
 

($7.7
)
Selling, general and administrative expenses
 
(3.4
)
 
(2.8
)
 
 

($16.7
)
 

($10.5
)
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 third quarter of 2017 and 2016, the cumulative cost of all settlements exceeded the sum of the service cost and interest cost components of net periodic pension cost for the Salaried Plan. The Company completed a full remeasurement of its pension obligations and plan assets associated with the Salaried Plan as of September 30, 2017 and 2016, which resulted in a non-cash pre-tax loss from remeasurement of $2.3 million and $20.4 million, respectively, included in other income (expense), net on the Unaudited Consolidated Statements of Operations.
.
Earnings Per Share
Earnings Per Share
Earnings 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 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 (loss) to add back interest expense (including amortization of debt discount) recognized on the convertible notes and includes the number of shares potentially issuable related to the convertible notes in the weighted average shares outstanding.  Treasury stock is excluded from the denominator in calculating both basic and diluted earnings (loss) per share.

Common share equivalents, 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 and diluted loss per share for the three and nine months ended September 30, 2017 and 2016:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Numerator:
 
 
 
 
 
 
 
Net loss for basic and diluted earnings per share

($5.9
)
 

($22.2
)
 

($9.9
)
 

($38.5
)
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
Weighted average shares outstanding, basic
44,433,094

 
44,221,310

 
44,373,264

 
44,215,373

Dilutive effect of stock-based awards
—

 
—

 
—

 
—

Weighted average shares outstanding, diluted
44,433,094

 
44,221,310

 
44,373,264

 
44,215,373

 
 
 
 
 
 
 
 
Basic loss per share

($0.13
)
 

($0.50
)
 

($0.22
)
 

($0.87
)
Diluted loss per share

($0.13
)
 

($0.50
)
 

($0.22
)
 

($0.87
)
Income Taxes
Income Taxes
Income Taxes
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.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Provision (benefit) for income taxes

$0.1

 

($13.3
)
 

$1.2

 

($23.5
)
Effective tax rate
(1.5
)%
 
37.5
%
 
(14.0
)%
 
37.9
%

For the nine months ended September 30, 2017 and the year ended December 31, 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 September 30, 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, in the fourth quarter of 2016, the Company recorded full valuation allowance on its net U.S. deferred tax asset of $15.6 million. 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 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. The increase in the effective tax rate for the nine months ended September 30, 2017 is primarily due to a discrete charge of approximately $1.0 million recorded in the second quarter of 2017.
Contingencies
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 September 30, 2017 and December 31, 2016, TimkenSteel had a $0.7 million and $0.2 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. 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 September 30, 2017 and December 31, 2016, TimkenSteel had a $0.5 million and a $0.6 million reserve for such environmental matters, respectively, classified as other current and non-current liabilities on the Unaudited Consolidated Balance Sheets.
The following is a rollforward of the accrual related to environmental matters for the nine months ended September 30, 2017 and 2016:
 
Nine Months Ended September 30,
 
2017
2016
Beginning Balance, January 1

$0.6


$0.8

Expenses
0.1

—

Payments
(0.2
)
(0.2
)
Ending Balance, September 30

$0.5


$0.6

Recent Accounting Pronouncements (Policies)
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, 2016.
Change in Accounting Principle 
Change in Accounting Principle
On December 31, 2016, TimkenSteel changed its accounting principle for recognizing actuarial gains and losses and expected returns on plan assets for its defined benefit pension and other postretirement benefit plans. Prior to 2016, the Company amortized, as a component of pension and other postretirement expense, unrecognized actuarial gains and losses (included within accumulated other comprehensive income (loss)) over the average remaining service period of active employees expected to receive benefits under the plan, or average remaining life expectancy of inactive participants when all or almost all of plan participants are inactive. The Company historically has calculated the market-related value of plan assets based on a 5-year market adjustment. The value was determined by adjusting the fair value of plan assets to reflect the investment gains and losses during each of the last 5 years. The difference between the expected return on assets and actual return on assets was recognized at the rate of 20% per year (e.g., recognized over five years). Under the new principle, actuarial gains and losses are immediately recognized through net periodic benefit cost in the Statement of Operations upon the annual remeasurement at December 31, or on an interim basis as triggering events warrant remeasurement. In addition, the Company changed its accounting for measuring the market-related value of plan assets from a calculated amount (based on a five-year smoothing of asset returns) to fair value. The Company believes these changes are preferable, as they result in an accelerated recognition of changes in assumptions and market return on plan assets, as compared to the minimum amortization approach and market-related value of plan assets (i.e. delayed approach). Additionally, the Company believes the new accounting principles provide a better representation of the operating results of the Company and the impact of its benefit obligations (through the income statement) in the period when changes occur.
These changes have been applied retrospectively to prior periods beginning with the formation of the TimkenSteel pension and postretirement benefit plans during the second quarter of 2014. The cumulative effect of the change in accounting principles resulted in a reduction of additional paid in capital of $229.4 million per year as of the date of establishment of the TimkenSteel pension and other postretirement plans. For further information refer to our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC.
Recent Accounting Pronouncements 
The Company adopted the following Accounting Standard Updates (ASU) during the nine months ended September 30, 2017. With the exception of ASU 2017-07, 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.
Standard
 
 
 
2015-11
Inventory: Simplifying the Measurement of Inventory (Topic 330)
2016-15
Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force)
2016-16
 Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740)
2017-07
Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715)


In the first quarter of 2017, the FASB issued and the Company early adopted ASU 2017-07, “Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715).” This ASU requires entities to present non-service cost components of net periodic benefit cost in a caption below operating loss and provides that only service cost is eligible to be capitalized in inventory or construction of an asset. This ASU requires retrospective application of the change in the statement of operations and prospective application for the capitalization of service cost in assets. This ASU permits previously disclosed components of net periodic benefit costs as an estimation basis for applying the retrospective presentation as a practical expedient. Utilizing the practical expedient approach, based on amounts previously disclosed, the Company reclassified non-service components of net periodic benefit cost from cost of products sold and selling, general and administrative expenses, respectively, into other income (expense), net on the Unaudited Consolidated Statements of Operations. See Note 9 - Retirement and Postretirement Plans for additional information.

Accounting Standards Issued But Not Yet Adopted
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. This ASU eliminates the requirement to consider “down round” features when determining whether certain equity-linked financial instruments or embedded features are indexed to an entity’s own stock. It is effective for annual periods beginning after December 31, 2018. Early adoption is permitted. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In May 2017, the FASB issued ASU 2017-09, Compensation — Stock Compensation (Topic 718), Scope of Modification Accounting. This ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. This ASU shall be applied prospectively to awards modified on or after the adoption date. It is effective for annual periods beginning after December 31, 2017. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. TimkenSteel will apply this ASU for awards modified on or after January 1, 2018, as applicable. TimkenSteel does not expect this ASU to have a material impact on its results of operations or financial condition.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations - Clarifying the Definition of a Business.” This guidance clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. It is effective for annual periods beginning after December 31, 2017. TimkenSteel will apply this ASU to business combinations effective after January 1, 2018, as applicable.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU changes how entities will measure credit losses for most financial assets, including trade and other receivables. This guidance will replace the current incurred loss approach with an expected loss model. It is effective for annual periods beginning after December 31, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018 and interim periods therein. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize lease liabilities and right-of-use assets on the balance sheet for operating leases, and requires additional quantitative and qualitative disclosures. It is effective for annual reporting periods beginning after December 15, 2018. The Company regularly enters into operating leases. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition and will supersede Topic 605, “Revenue Recognition,” and most industry-specific guidance. Under ASU 2014-09 and the subsequently issued amendments, the core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Additional disclosures will be required about the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. This standard is effective for reporting periods after December 15, 2017. TimkenSteel has substantially completed a review of its customer contracts and has preliminarily determined that its revenue transactions will continue to be recognized at a point in time. Based on the analysis completed to date, the Company’s expectation is that this standard will not materially impact the amount or timing of revenue recognized. The Company is finalizing its review of accounting policies, systems and related internal controls in anticipation of adopting ASU 2014-09 as of January 1, 2018, using the modified retrospective approach.
Recent Accounting Pronouncements (Tables)
Schedule of Accounting Changes
The Company adopted the following Accounting Standard Updates (ASU) during the nine months ended September 30, 2017. With the exception of ASU 2017-07, 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.
Standard
 
 
 
2015-11
Inventory: Simplifying the Measurement of Inventory (Topic 330)
2016-15
Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force)
2016-16
 Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740)
2017-07
Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715)
Inventories (Tables)
Schedule of Components of Inventory
The components of inventories, net as of September 30, 2017 and December 31, 2016 were as follows:
 
September 30,
2017
 
December 31,
2016
Inventories, net:
 
 
 
Manufacturing supplies

$36.6

 

$37.9

Raw materials
31.7

 
16.2

Work in process
96.3

 
58.6

Finished products
63.5

 
59.6

Subtotal
228.1

 
172.3

Allowance for surplus and obsolete inventory
(8.6
)
 
(8.1
)
Total Inventories, net

$219.5

 

$164.2

Property, Plant and Equipment (Tables)
Property, Plant and Equipment
The components of property, plant and equipment, net as of September 30, 2017 and December 31, 2016, were as follows:
 
September 30,
2017
 
December 31,
2016
Property, Plant and Equipment, net:
 
 
 
Land

$13.4

 

$13.3

Buildings and improvements
418.9

 
420.6

Machinery and equipment
1,354.1

 
1,352.0

Construction in progress
51.6

 
63.9

Subtotal
1,838.0

 
1,849.8

Less allowances for depreciation
(1,136.4
)
 
(1,107.9
)
Property, Plant and Equipment, net

$701.6

 

$741.9

Intangible Assets (Tables)
Schedule of Finite-Lived Intangible Assets
The components of intangible assets, net as of September 30, 2017 and December 31, 2016 were as follows:
 
September 30, 2017
 
December 31, 2016
 
Gross Carrying Amount
 
 Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
 Accumulated Amortization
 
Net Carrying Amount
Intangible Assets Subject to Amortization:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships

$6.3

 

$4.0

 

$2.3

 

$6.3

 

$3.7

 

$2.6

Technology use
9.0

 
5.8

 
3.2

 
9.0

 
5.2

 
3.8

Capitalized software
58.5

 
43.1

 
15.4

 
58.9

 
40.3

 
18.6

Total Intangible Assets

$73.8

 

$52.9

 

$20.9

 

$74.2

 

$49.2

 

$25.0

Financing Arrangements (Tables)
Schedule of Components of Convertible Notes 
The components of the Convertible Notes as of September 30, 2017 and December 31, 2016 were as follows:
 
September 30,
2017
 
December 31,
2016
Principal

$86.3

 

$86.3

Less: Debt issuance costs, net of amortization
(1.8
)
 
(2.1
)
Less: Debt discount, net of amortization
(15.3
)
 
(17.8
)
Convertible notes, net

$69.2

 

$66.4

Schedule of Long-term Debt Instruments 
The components of other long-term debt as of September 30, 2017 and December 31, 2016 were as follows:
 
September 30,
2017
 
December 31,
2016
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017)

$12.2

 

$12.2

Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017)
9.5

 
9.5

Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.862% as of September 30, 2017)
8.5

 
8.5

Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
65.0

 
40.0

Total Other Long-Term Debt

$95.2

 

$70.2

The following table sets forth total interest expense recognized related to the Convertible Notes:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
2016
Contractual interest expense

$1.3

 

$1.3

 

$3.9


$1.7

Amortization of debt issuance costs
0.1

 
0.1

0.1

0.3

0.2

Amortization of debt discount
0.9

 
0.7

 
2.5

0.9

Total

$2.3

 

$2.1

 

$6.7


$2.8

Accumulated Other Comprehensive Loss (Tables)
Schedule of Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive loss for the nine months ended September 30, 2017 and 2016 by component are as follows:
 
Foreign Currency Translation Adjustments
 
Pension and Postretirement Liability Adjustments
 
Total
Balance at December 31, 2016

($7.0
)
 

($2.4
)
 

($9.4
)
Other comprehensive income before reclassifications, before income tax
1.1

 
—

 
1.1

Amounts reclassified from accumulated other comprehensive loss, before income tax
—

 
1.1

 
1.1

Income tax benefit
—

 
(0.7
)
 
(0.7
)
Net current period other comprehensive income, net of income taxes
1.1

 
0.4

 
1.5

Balance at September 30, 2017

($5.9
)
 

($2.0
)
 

($7.9
)

 
Foreign Currency Translation Adjustments
 
Pension and Postretirement Liability Adjustments
 
Total
Balance at December 31, 2015

($5.0
)
 

($2.9
)
 

($7.9
)
Other comprehensive loss before reclassifications, before income tax
(2.8
)
 
—

 
(2.8
)
Amounts reclassified from accumulated other comprehensive loss, before income tax
—

 
1.2

 
1.2

    Income tax benefit
—

 
(0.4
)
 
(0.4
)
Net current period other comprehensive (loss) income, net of income taxes
(2.8
)
 
0.8

 
(2.0
)
Balance as of September 30, 2016

($7.8
)
 

($2.1
)
 

($9.9
)
Changes in Shareholders' Equity (Tables)
Schedule of Stockholders Equity
Changes in the components of shareholders’ equity for the nine months ended September 30, 2017 were as follows:
 
Total
 
Additional Paid-in Capital
 
Retained Deficit
 
Treasury Shares
 
Accumulated Other Comprehensive Loss
Balance at December 31, 2016

$597.4

 

$845.6

 

($193.9
)
 

($44.9
)
 

($9.4
)
Net loss
(9.9
)
 
—

 
(9.9
)
 
—

 
—

Pension and postretirement adjustment, net of tax
0.4

 
—

 
—

 
—

 
0.4

Foreign currency translation adjustments
1.1

 
—

 
—

 
—

 
1.1

Stock-based compensation expense
4.9

 
4.9

 
—

 
—

 
—

Stock option activity
0.2

 
0.2

 
—

 
—

 
—

Issuance of treasury shares
—

 
(8.4
)
 
(0.3
)
 
8.7

 
—

Shares surrendered for taxes
(1.4
)
 
—

 
—

 
(1.4
)
 
—

Balance at September 30, 2017

$592.7

 

$842.3

 

($204.1
)
 

($37.6
)
 

($7.9
)
Retirement and Postretirement Benefits (Tables)
Schedule of Defined Benefit Plans Disclosures
The components of net periodic benefit cost for the three and nine months ended September 30, 2017 and 2016 were as follows:
 
Three Months Ended
September 30, 2017
 
Three Months Ended
September 30, 2016
Components of net periodic benefit cost:
Pension
 
Postretirement
 
Pension
 
Postretirement
Service cost

$4.6

 

$0.4

 

$3.9

 

$0.4

Interest cost
12.3

 
2.1

 
13.2

 
2.4

Expected return on plan assets
(17.7
)
 
(1.3
)
 
(18.1
)
 
(1.5
)
Amortization of prior service cost
0.1

 
0.2

 
0.1

 
0.2

Net remeasurement loss
2.3

 
—

 
20.4

 
—

Net Periodic Benefit Cost

$1.6

 

$1.4

 

$19.5

 

$1.5

 
Nine Months Ended
September 30, 2017
 
Nine Months Ended
September 30, 2016
Components of net periodic benefit cost:
Pension
 
Postretirement
 
Pension
 
Postretirement
Service cost

$13.8

 

$1.2

 

$11.7

 

$1.2

Interest cost
36.8

 
6.3

 
39.8

 
7.1

Expected return on plan assets
(52.9
)
 
(4.0
)
 
(53.6
)
 
(4.4
)
Amortization of prior service cost
0.3

 
0.8

 
0.4

 
0.8

Net remeasurement loss
2.3

 
—

 
20.4

 
—

Net Periodic Benefit Cost

$0.3

 

$4.3

 

$18.7

 

$4.7

Earnings Per Share (Tables)
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 loss per share for the three and nine months ended September 30, 2017 and 2016:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Numerator:
 
 
 
 
 
 
 
Net loss for basic and diluted earnings per share

($5.9
)
 

($22.2
)
 

($9.9
)
 

($38.5
)
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
Weighted average shares outstanding, basic
44,433,094

 
44,221,310

 
44,373,264

 
44,215,373

Dilutive effect of stock-based awards
—

 
—

 
—

 
—

Weighted average shares outstanding, diluted
44,433,094

 
44,221,310

 
44,373,264

 
44,215,373

 
 
 
 
 
 
 
 
Basic loss per share

($0.13
)
 

($0.50
)
 

($0.22
)
 

($0.87
)
Diluted loss per share

($0.13
)
 

($0.50
)
 

($0.22
)
 

($0.87
)
Income Taxes (Tables)
Schedule of Components of Income Tax Expense (Benefit)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Provision (benefit) for income taxes

$0.1

 

($13.3
)
 

$1.2

 

($23.5
)
Effective tax rate
(1.5
)%
 
37.5
%
 
(14.0
)%
 
37.9
%
Contingencies (Tables)
Schedule of Loss Contingencies by Contingency
The following is a rollforward of the accrual related to environmental matters for the nine months ended September 30, 2017 and 2016:
 
Nine Months Ended September 30,
 
2017
2016
Beginning Balance, January 1

$0.6


$0.8

Expenses
0.1

—

Payments
(0.2
)
(0.2
)
Ending Balance, September 30

$0.5


$0.6

Company and Basis of Presentation - Narrative (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2017
T
manufacturing_facility
Dec. 31, 2016
Dec. 31, 2015
Jun. 30, 2014
Additional Paid-in Capital
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
 
 
Annual melt capacity
2,000,000 
 
 
 
Shipment capacity
1,500,000 
 
 
 
Number of manufacturing facilities
3 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
Market adjustment period
 
 
5 years 
 
Amortization recognition rate
 
 
20.00% 
 
Amortization recognition period
 
 
5 years 
 
Smoothing period for returns of plan assets
 
5 years 
 
 
Reduction of additional paid in capital
 
 
 
$ 229.4 
Inventories - Schedule of Inventory (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Inventory Disclosure [Abstract]
 
 
Manufacturing supplies
$ 36.6 
$ 37.9 
Raw materials
31.7 
16.2 
Work in process
96.3 
58.6 
Finished products
63.5 
59.6 
Subtotal
228.1 
172.3 
Allowance for surplus and obsolete inventory
(8.6)
(8.1)
Total Inventories, net
$ 219.5 
$ 164.2 
Inventories - Narrative (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Inventory Disclosure [Abstract]
 
 
Percentage of LIFO inventory
64.00% 
 
LIFO reserve
$ 53.5 
$ 44.6 
Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Property, Plant and Equipment [Abstract]
 
 
Land
$ 13.4 
$ 13.3 
Buildings and improvements
418.9 
420.6 
Machinery and equipment
1,354.1 
1,352.0 
Construction in progress
51.6 
63.9 
Subtotal
1,838.0 
1,849.8 
Less allowances for depreciation
(1,136.4)
(1,107.9)
Property, Plant and Equipment, net
$ 701.6 
$ 741.9 
Property, Plant and Equipment - Narrative (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Property, Plant and Equipment [Abstract]
 
 
Depreciation
$ 51,300,000 
$ 51,000,000 
Interest costs capitalized
500,000 
500,000 
Impairment charges
$ 400,000 
$ 0 
Intangible Assets - Schedule of Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 73.8 
$ 74.2 
Accumulated Amortization
52.9 
49.2 
Net Carrying Amount
20.9 
25.0 
Customer relationships
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
6.3 
6.3 
Accumulated Amortization
4.0 
3.7 
Net Carrying Amount
2.3 
2.6 
Technology use
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
9.0 
9.0 
Accumulated Amortization
5.8 
5.2 
Net Carrying Amount
3.2 
3.8 
Capitalized software
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
58.5 
58.9 
Accumulated Amortization
43.1 
40.3 
Net Carrying Amount
$ 15.4 
$ 18.6 
Intangible Assets - Narrative (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Intangible Assets, Net (Excluding Goodwill) [Abstract]
 
 
Amortization expense for intangible assets
$ 5.1 
$ 5.2 
Financing Arrangements - Narrative (Details) (USD $)
9 Months Ended 9 Months Ended 1 Months Ended 9 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Sep. 30, 2017
Advanced Quench-and-Temper Facility
Sep. 30, 2017
TimkenSteel Material Services, LLC
Advanced Quench-and-Temper Facility
Sep. 30, 2017
Amended Credit Agreement
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
Sep. 30, 2017
Amended Credit Agreement
Letters of Credit
Sep. 30, 2017
Amended Credit Agreement
Swingline Loans
Sep. 30, 2017
Amended Credit Agreement
Machinery and Equipment
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
LIBOR
Sep. 30, 2017
Amended Credit Agreement
Minimum
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
Sep. 30, 2017
Amended Credit Agreement
Minimum
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
LIBOR
Sep. 30, 2017
Amended Credit Agreement
Minimum
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
Prime Rate
Sep. 30, 2017
Amended Credit Agreement
Maximum
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
Sep. 30, 2017
Amended Credit Agreement
Maximum
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
LIBOR
Sep. 30, 2017
Amended Credit Agreement
Maximum
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
Prime Rate
May 31, 2016
Convertible Senior Notes
Convertible Senior Notes due 2021 (6.00% fixed rate) Issuance One
May 31, 2016
Convertible Senior Notes
Convertible Senior Notes due 2021 (6.00% fixed rate) Issuance Two
May 31, 2016
Convertible Senior Notes
Convertible Senior Notes, due 2021 (6.00% fixed rate)
Sep. 30, 2017
Convertible Senior Notes
Convertible Senior Notes, due 2021 (6.00% fixed rate)
Dec. 31, 2016
Convertible Senior Notes
Convertible Senior Notes, due 2021 (6.00% fixed rate)
Sep. 30, 2017
Revenue Refunding Bonds
State of Ohio Water Development , Air Quality Development Development, and Pollution Control Revenue Refunding Bonds [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 75,000,000 
$ 11,300,000 
 
 
 
 
Interest rate
 
 
 
 
 
5.20% 
 
 
 
 
 
 
 
 
 
 
 
6.00% 
 
 
 
Conversion price (in dollars per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 12.58 
 
 
 
Conversion ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.0795165 
 
 
 
Net proceeds
0 
86,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83,200,000 
 
 
 
Initial value of principal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
66,900,000 
69,200,000 
66,400,000 
 
Effective interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12.00% 
 
 
 
Principal amount allocated to conversion feature
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19,400,000 
 
 
 
Transaction costs, debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,400,000 
1,800,000 
2,100,000 
 
Transaction costs, equity component of convertible debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
700,000 
 
 
 
Fair value of convertible notes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
162,800,000 
 
 
Multiples of principal which may be converted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
 
 
Conversion price observation period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40 days 
 
 
Percentage of holders of notes required to be notified of debt default
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25.00% 
 
 
Percentage of principal that can be called in the event of debt default
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
 
 
Maximum borrowing capacity for amended credit agreement
 
 
 
 
 
265,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capacity available for letters of credit and swingline loans
 
 
 
 
 
 
13,300,000 
26,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Block on availability of borrowings
 
 
 
 
 
28,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Block on availability of borrowings as a percent of aggregate commitments
 
 
 
 
 
12.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Block on availability of borrowing following a mandatory reduction in commitments
 
 
 
 
 
20,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Block on availability of borrowing following a mandatory reduction in commitments as a percent of aggregate commitments
 
 
 
 
 
12.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Limit on capital expenditures during 2016
 
 
 
 
 
 
 
 
 
 
 
 
45,000,000 
 
 
 
 
 
 
 
 
Limit on capital expenses thereafter
 
 
 
 
 
 
 
 
 
 
 
 
50,000,000 
 
 
 
 
 
 
 
 
Variable rate margin
 
 
 
 
 
 
 
 
0.75% 
 
3.00% 
2.00% 
 
3.50% 
2.50% 
 
 
 
 
 
 
Commitment fee margin
 
 
 
 
 
 
 
 
 
0.50% 
 
 
 
 
 
 
 
 
 
 
 
Amount available under amended credit agreement
 
 
 
 
 
164,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount available under amended credit agreement, including block on availability
 
 
 
 
 
33,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bond term
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 year 
Bond extension term
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 year 
Bond ownership percentage
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount spent on facilities
51,600,000 
 
63,900,000 
39,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount financed through capital lease arrangement
 
 
 
$ 11,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financing Arrangements - Schedule of Convertible Debt (Details) (Convertible Senior Notes, Convertible Senior Notes, due 2021 (6.00% fixed rate), USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
May 31, 2016
Convertible Senior Notes |
Convertible Senior Notes, due 2021 (6.00% fixed rate)
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal
$ 86.3 
$ 86.3 
 
Less: Debt issuance costs, net of amortization
(1.8)
(2.1)
(2.4)
Less: Debt discount, net of amortization
(15.3)
(17.8)
 
Net carrying amount
$ 69.2 
$ 66.4 
$ 66.9 
Financing Arrangements - Schedule of Interest Expense (Details) (Convertible Senior Notes, Convertible Senior Notes, due 2021 (6.00% fixed rate), USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Convertible Senior Notes |
Convertible Senior Notes, due 2021 (6.00% fixed rate)
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
Contractual interest expense
$ 1.3 
$ 1.3 
$ 3.9 
$ 1.7 
Amortization of debt issuance costs
0.1 
0.1 
0.3 
0.2 
Amortization of debt discount
0.9 
0.7 
2.5 
0.9 
Total
$ 2.3 
$ 2.1 
$ 6.7 
$ 2.8 
Financing Arrangements - Schedule of Other Long-Term Debt (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Debt Instrument [Line Items]
 
 
Other long-term debt
$ 95.2 
$ 70.2 
Revenue Refunding Bonds |
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017)
 
 
Debt Instrument [Line Items]
 
 
Other long-term debt
12.2 
12.2 
Interest rate
0.862% 
 
Revenue Refunding Bonds |
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.862% as of September 30, 2017)
 
 
Debt Instrument [Line Items]
 
 
Other long-term debt
9.5 
9.5 
Interest rate
0.862% 
 
Revenue Refunding Bonds |
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.862% as of September 30, 2017)
 
 
Debt Instrument [Line Items]
 
 
Other long-term debt
8.5 
8.5 
Interest rate
0.862% 
 
Credit Agreement |
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
 
 
Debt Instrument [Line Items]
 
 
Other long-term debt
$ 65.0 
$ 40.0 
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Foreign Currency Translation Adjustments
Sep. 30, 2016
Foreign Currency Translation Adjustments
Sep. 30, 2017
Pension and Postretirement Liability Adjustments
Sep. 30, 2016
Pension and Postretirement Liability Adjustments
Sep. 30, 2017
Total
Dec. 31, 2016
Total
Sep. 30, 2016
Total
Dec. 31, 2015
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
 
 
 
 
 
 
 
 
 
 
Beginning Balance
 
 
$ (7.0)
$ (5.0)
$ (2.4)
$ (2.9)
$ (7.9)
$ (9.4)
$ (9.9)
$ (7.9)
Other comprehensive income before reclassifications, before income tax
1.1 
(2.8)
1.1 
(2.8)
0 
0 
 
 
 
 
Amounts reclassified from accumulated other comprehensive loss, before income tax
1.1 
1.2 
0 
0 
1.1 
1.2 
 
 
 
 
Income tax benefit
(0.7)
(0.4)
0 
0 
(0.7)
(0.4)
 
 
 
 
Net current period other comprehensive income, net of income taxes
1.5 
(2.0)
1.1 
(2.8)
0.4 
0.8 
 
 
 
 
Ending Balance
 
 
$ (5.9)
$ (7.8)
$ (2.0)
$ (2.1)
$ (7.9)
$ (9.4)
$ (9.9)
$ (7.9)
Changes in Shareholders' Equity -Schedule of Changes in Components of Shareholder's Equity (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Balance at December 31, 2016
 
 
$ 597.4 
 
Net Loss
(5.9)
(22.2)
(9.9)
(38.5)
Pension and postretirement adjustment, net of tax
0.1 
0 
0.4 
0.8 
Foreign currency translation adjustments
0.3 
(0.5)
1.1 
(2.8)
Stock-based compensation expense
 
 
4.9 
 
Stock option activity
 
 
0.2 
 
Issuance of treasury shares
 
 
0 
 
Shares surrendered for taxes
 
 
(1.4)
 
Balance at September 30, 2017
592.7 
 
592.7 
 
Additional Paid-in Capital
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Balance at December 31, 2016
 
 
845.6 
 
Net Loss
 
 
0 
 
Pension and postretirement adjustment, net of tax
 
 
0 
 
Foreign currency translation adjustments
 
 
0 
 
Stock-based compensation expense
 
 
4.9 
 
Stock option activity
 
 
0.2 
 
Issuance of treasury shares
 
 
(8.4)
 
Shares surrendered for taxes
 
 
0 
 
Balance at September 30, 2017
842.3 
 
842.3 
 
Retained Deficit
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Balance at December 31, 2016
 
 
(193.9)
 
Pension and postretirement adjustment, net of tax
 
 
0 
 
Foreign currency translation adjustments
 
 
0 
 
Stock-based compensation expense
 
 
0 
 
Stock option activity
 
 
0 
 
Issuance of treasury shares
 
 
(0.3)
 
Shares surrendered for taxes
 
 
0 
 
Balance at September 30, 2017
(204.1)
 
(204.1)
 
Treasury Shares
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Balance at December 31, 2016
 
 
(44.9)
 
Net Loss
 
 
0 
 
Pension and postretirement adjustment, net of tax
 
 
0 
 
Foreign currency translation adjustments
 
 
0 
 
Stock-based compensation expense
 
 
0 
 
Stock option activity
 
 
0 
 
Issuance of treasury shares
 
 
8.7 
 
Shares surrendered for taxes
 
 
(1.4)
 
Balance at September 30, 2017
(37.6)
 
(37.6)
 
Accumulated Other Comprehensive Loss
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Balance at December 31, 2016
 
 
(9.4)
 
Net Loss
 
 
0 
 
Pension and postretirement adjustment, net of tax
 
 
0.4 
 
Foreign currency translation adjustments
 
 
1.1 
 
Stock-based compensation expense
 
 
0 
 
Stock option activity
 
 
0 
 
Issuance of treasury shares
 
 
0 
 
Shares surrendered for taxes
 
 
0 
 
Balance at September 30, 2017
$ (7.9)
 
$ (7.9)
 
Retirement and Postretirement Benefits - Schedule of Components of Net Periodic Benefit Cost (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
 
Service cost
 
$ 16.7 
 
$ 10.5 
Pension
 
 
 
 
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
 
Service cost
4.6 
3.9 
13.8 
11.7 
Interest cost
12.3 
13.2 
36.8 
39.8 
Expected return on plan assets
(17.7)
(18.1)
(52.9)
(53.6)
Amortization of prior service cost
0.1 
0.1 
0.3 
0.4 
Net remeasurement loss
2.3 
20.4 
2.3 
20.4 
Net Periodic Benefit Cost
1.6 
19.5 
0.3 
18.7 
Postretirement
 
 
 
 
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
 
Service cost
0.4 
0.4 
1.2 
1.2 
Interest cost
2.1 
2.4 
6.3 
7.1 
Expected return on plan assets
(1.3)
(1.5)
(4.0)
(4.4)
Amortization of prior service cost
0.2 
0.2 
0.8 
0.8 
Net remeasurement loss
0 
0 
0 
0 
Net Periodic Benefit Cost
$ 1.4 
$ 1.5 
$ 4.3 
$ 4.7 
Retirement and Postretirement Benefits - Amounts Reclassified Into Income (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Service cost
$ (16.7)
$ (10.5)
Cost of products sold
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Service cost
(13.3)
(7.7)
Selling, general and administrative expenses
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Service cost
$ (3.4)
$ (2.8)
Retirement and Postretirement Benefits - Narrative (Details) (Pension, USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Pension
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Net remeasurement loss
$ 2.3 
$ 20.4 
$ 2.3 
$ 20.4 
Earnings Per Share - Schedule of Earnings Per Share (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Numerator:
 
 
 
 
Net loss for basic and diluted earnings per share
$ (5.9)
$ (22.2)
$ (9.9)
$ (38.5)
Denominator:
 
 
 
 
Weighted average shares outstanding, basic (in shares)
44,433,094 
44,221,310 
44,373,264 
44,215,373 
Dilutive effect of stock-based awards (in shares)
0 
0 
0 
0 
Weighted average shares outstanding, diluted (in shares)
44,433,094 
44,221,310 
44,373,264 
44,215,373 
Basic loss per share (in dollars per share)
$ (0.13)
$ (0.50)
$ (0.22)
$ (0.87)
Diluted loss per share (in dollars per share)
$ (0.13)
$ (0.50)
$ (0.22)
$ (0.87)
Income Taxes - Schedule of Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Federal
Income Tax Disclosure [Abstract]
 
 
 
 
 
Provision (benefit) for income taxes
$ 0.1 
$ (13.3)
$ 1.2 
$ (23.5)
 
Effective tax rate
(1.50%)
37.50% 
(14.00%)
37.90% 
 
Income Tax Examination [Line Items]
 
 
 
 
 
Valuation allowance
 
 
 
 
15.6 
Discrete income tax charge
$ 1.0 
 
 
 
 
Contingencies - Schedule of Contingencies (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Loss Contingency Accrual, Disclosures [Abstract]
 
 
 
Contingency reserves
$ 0.7 
 
$ 0.2 
Accrual for Environmental Loss Contingencies [Roll Forward]
 
 
 
Beginning Balance, January 1
0.6 
0.8 
 
Expenses
0.1 
0 
 
Payments
(0.2)
(0.2)
 
Ending Balance, September 30
$ 0.5 
$ 0.6