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TimkenSteel Announces Second Quarter of 2019 Results

Steel News - Published on Mon, 05 Aug 2019

Image Source: PR Newswire
TimkenSteel reported 2019 second quarter net sales of USD 336.7 million and a net loss of USD 4.4 million or minus USD 0.10 per diluted share. In the same quarter last year, net sales were USD 413.5 million with net income of USD 8.4 million or USD 0.19 per diluted share. Adjusted EBITDA for the second quarter of 2019 was USD 27.5 million, a decrease of USD 3.4 million over the same quarter last year. Mr Tim Timken, chairman, CEO and president said that "Despite demand weakness in certain end markets, we continue to focus on expanding market share in our key markets while maintaining price and improving product mix. During the quarter we continued to execute our profitability improvement plan which included cost reductions and restructuring in our technical and commercial organizations to further drive innovation and focus on our key growth areas such as value-added components, energy products and government business."

SECOND QUARTER OF 2019 FINANCIAL SUMMARY

Second quarter net sales decreased USD 77 million or 19% compared with prior year.

Ship tons were 248,100, a decrease of 20% from the second quarter of 2018. The decrease was due primarily to lower shipments in the industrial and oil country tubular goods end markets.

The decline in net sales compared with the prior-year period is due to lower volume as well as lower surcharges of approximately USD 26 million. Surcharge revenue represented a 25% decrease from the prior-year period.

Decreases were partially offset by favorable price and mix, as the company realized the benefit of prior period price increases and a focused strategy to sell its higher value products.

Second quarter of 2019 Adjusted EBITDA decreased to USD 27.5 million compared with USD 30.9 million for the same period a year ago.

Improvements in pricing combined with lower OCTG billet volume drove an increase of approximately USD 13 million in price and mix.

The company continues to execute profitability improvement actions aggressively, with a focus on cost savings, improved efficiency, better resource allocation and growth in targeted markets.

Recent restructuring actions were implemented to enhance profitability. This resulted in the elimination of approximately 55 salaried positions which is expected to generate savings of approximately USD 2 million in 2019 and annual savings of approximately USD 7 million beginning in 2020.

The company raised its profitability improvement target to approximately USD 60 million on an annualized basis, with approximately USD 35 million expected to be realized in 2019.

THIRD QUARTER OF 2019 OUTLOOK
Shipments are expected to be 10% below the second quarter of 2019.
Net loss is projected to be between USD 17 million and USD 27 million.
EBITDA is projected to be between (USD 5) million and USD 5 million.
Aligning production with demand will result in a decline in planned production levels in the third-quarter 2019 to 47% melt utilization from 57% utilization last quarter. This lower level of production, combined with the second half of planned annual maintenance of approximately USD 6 million dollars, will have a negative impact on fixed cost leverage and profitability during the third quarter.
LIFO is projected to be a benefit of approximately USD 6 million.
2019 capital spending is projected to be approximately USD 50 million.

Source :

Posted By : Ratan Singh on Mon, 05 Aug 2019
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