TimkenSteel (TMST) Tops Q4 EPS by 20c, Revenues Miss
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TimkenSteel (NYSE: TMST) reported Q4 EPS of $0.01, $0.20 better than the analyst estimate of ($0.19). Revenue for the quarter came in at $211.2 million versus the consensus estimate of $216.8 million.
FOURTH QUARTER OF 2020 FINANCIAL SUMMARY
- Net sales of $211.2 million increased 3 percent compared with $205.9 million in the third quarter of 2020, driven primarily by a continued rebound in automotive demand. Compared with the prior-year quarter, net sales declined 7 percent largely driven by lower ship tons.
- Ship tons of 164,000 increased 6 percent sequentially as a result of higher automotive and industrial shipments. When compared with the prior-year quarter, ship tons declined 9 percent due to lower industrial, energy and OCTG billet demand, partially offset by higher automotive shipments.
- Manufacturing costs improved sequentially as a result of higher melt utilization and the timing of the planned annual maintenance shutdown that occurred in the third quarter of 2020. Compared with the prior-year quarter, manufacturing costs improved due to higher melt utilization and the impact of systemic cost reduction actions.
- SG&A expense was $18.6 million, a 4 percent increase from the third quarter of 2020 as a result of higher variable compensation expense. Excluding certain items(2), SG&A expense improved 11 percent from the prior year period as a result of savings from employee restructuring actions.
"I'd like to thank the employees of TimkenSteel who worked tirelessly throughout 2020, under challenging conditions, to support our customers' needs while making significant progress on improving our cost structure and processes. These actions are helping to transform our company and will better position us to leverage improving end markets as we enter 2021," said Mike Williams, president and chief executive officer. "In 2020, the TimkenSteel team delivered improved adjusted EBITDA(2) and strong operating cash flow while, most importantly, achieving excellent safety performance.
"Our 2021 priorities are clear – improve our commercial effectiveness, enhance manufacturing efficiencies, and streamline business processes while continuing to take out unnecessary costs. We remain deeply focused on creating value for our shareholders through improved profitability and an intense focus on cash," stated Williams.
Given the extent and uncertainty of the impact of COVID-19 on the economy and TimkenSteel's customers, the company is not providing quantitative earnings guidance for the first quarter of 2021. We are, however, encouraged by recent improvements in automotive and industrial end market demand.
From a cash sources and uses perspective, the company expects:
- Cash from operating activities to be a use of cash in the first quarter of 2021 given improving demand and the rise in raw material prices.
- Capital expenditures to be approximately $20 million in 2021.
- Required pension contributions to be modest at $1 million to $2 million in 2021.
For earnings history and earnings-related data on TimkenSteel (TMST) click here.
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