TimkenSteel (TMST) Misses Q1 EPS by 2c, Revenues Beat

TimkenSteel (NYSE: TMST) reported Q1 EPS of ($0.25), $0.02 worse than the analyst estimate of ($0.23). Revenue for the quarter came in at $259.7 million versus the consensus estimate of $255.65 million.

FIRST QUARTER OF 2020 FINANCIAL SUMMARY

• Net sales of $259.7 million decreased $111.3 million or approximately 30 percent compared with the prior-year first quarter. Lower shipment volume, surcharge revenue and base sales per ton all were contributing factors to the decline in net sales. In comparison to the fourth quarter of 2019, net sales increased 14 percent.
• Ship tons of 213,400 declined 18 percent from the prior-year first quarter as a result of lower demand across all end markets with the exception of OCTG billets. In comparison to the fourth quarter of 2019, ship tons increased 19 percent.
• Surcharge revenue decreased $43.8 million or 49 percent from the prior-year period driven by lower shipment volume coupled with a 38 percent decline in the average surcharge per ton due to lower market prices for scrap and alloys.
• Manufacturing cost absorption was negatively impacted by low plant utilization compared with the prior-year first quarter, partially offset by aggressive cost control actions.
• SG&A expense of $23.4 million was relatively consistent with the prior-year first quarter and reflects a non-cash increase in bad debt expense and variable compensation, substantially offset by lower wages and benefits as a result of the company's restructuring actions.

"Our most important priority is always the health and well-being of our employees. That has never been more important than during the ongoing COVID-19 crisis. I am proud that we achieved the safest quarter in the company's history while implementing significant COVID-19-related changes in our operations. At the same time, we remain highly focused on improving the company's financial results, significantly reducing costs and aggressively managing working capital. Our customers also are navigating an unprecedented environment and we're staying very close to them to listen to their needs and serve them effectively," said Terry L. Dunlap, interim chief executive officer and president. "During the first quarter, we generated record-high operating cash flow and achieved our earnings guidance. In the coming months, we intend to safely maintain flexible production schedules to meet what is expected to be lower customer demand while continuing to further reduce costs and prudently conserve cash to maximize our available liquidity."

OUTLOOK

As noted, the company will continue to focus on employee safety, serving customers, conserving cash and aligning costs and production with sharply lower COVID-19-driven demand. The company remains committed to delivering approximately $70 million of run rate savings from its previous cost reduction actions. Additionally, the company executed recent actions as noted above and will continue to evaluate other actions to further improve its cost structure and position the company well when its markets recover.

The extent and duration of the COVID-19 pandemic and resulting effect on the company's operations and financial results remain uncertain. Given the evolving impact of COVID-19 on the overall economy, the company will not provide quarterly guidance at this time.

For earnings history and earnings-related data on TimkenSteel (TMST) click here.

You May Also Be Interested In

• Tesla plans 'flying' Roadster stunt at SpaceX Texas site as early as August
• Algorhythm Holdings (RIME) Tops Q2 EPS by 54c
• Zeo Energy Corp (ZEO) Misses Q2 EPS by 7c