[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited statements for H1 2022 show significant growth in net sales and net income, with strong operating cash flow [Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) H1 2022 net sales reached $767.7 million and net income hit $111.6 million, driven by strong Q2 performance Consolidated Statements of Operations Highlights (Unaudited) | Metric (in millions) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $415.7 | $327.3 | $767.7 | $600.9 | | **Gross Profit** | $81.4 | $67.2 | $141.4 | $97.9 | | **Income Before Taxes** | $76.0 | $55.4 | $114.0 | $65.4 | | **Net Income** | $74.5 | $54.0 | $111.6 | $63.8 | | **Diluted EPS** | $1.42 | $0.98 | $2.12 | $1.19 | [Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) Total assets grew to $1.22 billion while liabilities decreased, boosting shareholders' equity to $768.9 million Consolidated Balance Sheet Summary (Unaudited) | Metric (in millions) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $669.6 | $582.3 | | **Total Assets** | $1,217.3 | $1,158.9 | | **Total Current Liabilities** | $260.0 | $250.8 | | **Total Liabilities** | $448.4 | $494.3 | | **Total Shareholders' Equity** | $768.9 | $664.6 | [Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Operating cash flow for H1 2022 increased to $64.0 million, while financing activities used $74.2 million Consolidated Cash Flow Summary (Unaudited) | Metric (in millions) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $64.0 | $52.4 | | **Net Cash Used by Investing Activities** | $(9.9) | $(3.8) | | **Net Cash Used by Financing Activities** | $(74.2) | $(36.2) | | **Increase (Decrease) in Cash** | $(20.1) | $12.4 | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail strong revenue growth, capital management via debt and stock repurchases, and pension plan changes Net Sales by End-Market Sector (Six Months Ended June 30) | End-Market (in millions) | 2022 | 2021 | | :--- | :--- | :--- | | Mobile | $297.0 | $266.5 | | Industrial | $383.2 | $298.3 | | Energy | $71.3 | $21.0 | | Other | $16.2 | $15.1 | | **Total Net Sales** | **$767.7** | **$600.9** | - In the first half of 2022, the company repurchased **$25.2 million in principal of its Convertible Senior Notes** Due 2025 for a total cash payment of $67.6 million, resulting in a **loss on extinguishment of debt of $43.0 million**[70](index=70&type=chunk) - The company entered an agreement with Prudential to transfer approximately **$256.2 million of its Bargaining Plan pension obligations** via a group annuity contract, funded by plan assets[81](index=81&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) H1 2022 net sales rose 27.8% due to higher surcharges and favorable price/mix, maintaining strong liquidity - Net sales for H1 2022 **increased by $166.8 million (27.8%)** compared to H1 2021, driven by a **$89.3 million increase in surcharges** and a **$74.6 million improvement in price/mix**[110](index=110&type=chunk) - Gross profit for H1 2022 **increased by $43.5 million (44.4%)** compared to H1 2021, primarily due to favorable price/mix, partially offset by higher manufacturing costs[115](index=115&type=chunk) - Total liquidity as of June 30, 2022, was **$558.7 million**, consisting of **$238.5 million in cash** and **$320.2 million in available borrowing capacity**[146](index=146&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is commodity price volatility, managed via surcharges, with no variable-rate debt - As of June 30, 2022, the company had **no variable-rate debt outstanding**, thus a rise in interest rates would not impact current interest expense[181](index=181&type=chunk) - The company's primary market risk is **commodity price fluctuation** for raw materials and energy, which is managed through supplier agreements and a surcharge mechanism[183](index=183&type=chunk)[184](index=184&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - The principal executive officer and principal financial officer concluded that the company's **disclosure controls and procedures were effective** as of the end of the period covered by the report[185](index=185&type=chunk) - **No changes in internal control over financial reporting** occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[186](index=186&type=chunk) [Part II. Other Information](index=35&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal matters are not expected to have a material adverse effect on the company's financial condition - Management does not expect ongoing legal proceedings to have a **material adverse effect** on the company's financial condition or results[188](index=188&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors disclosed in the 2021 Annual Report on Form 10-K - For a discussion of risks and uncertainties, the report refers to the Risk Factors section in the **Annual Report on Form 10-K for the year ended December 31, 2021**[189](index=189&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 437,638 common shares for $9.3 million in Q2 2022 under its authorized program Share Repurchase Activity (Q2 2022) | Metric | Value | | :--- | :--- | | Total shares purchased | 437,638 | | Average price paid per share | $21.20 | | Total cost (in millions) | ~$9.3 | | Max value remaining under program (in millions) | $37.3 | [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required certifications and XBRL data

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-36313 TIMKENSTEEL CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organi ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) TimkenSteel manufactures alloy and carbon steel products for diverse markets, reducing melt capacity to 1.2 million tons in 2021 - The company manufactures **alloy, carbon, and micro-alloy steel products** like SBQ bars, seamless tubes, and precision components for various markets including automotive, oil and gas, and industrial equipment[10](index=10&type=chunk) - In Q1 2021, TimkenSteel indefinitely idled its Harrison melt and casting assets, reducing its annual melt capacity from approximately **2 million tons to 1.2 million tons** and shipment capacity from **1.5 million to 0.9 million tons**[13](index=13&type=chunk) Research and Development Expense | Year | Expense (in millions) | | :--- | :--- | | 2021 | $1.7 | | 2020 | $1.8 | | 2019 | $4.1 | 2030 Environmental Goals (vs. 2018 Baseline) | Metric | Target Reduction | | :--- | :--- | | Scope 1 & 2 GHG Emissions | 40% absolute reduction | | Total Energy Consumption | 30% absolute reduction | | Fresh Water Withdrawn | 35% absolute reduction | | Waste-to-Landfill Intensity | 10% reduction | - As of December 31, 2021, the company had approximately **1,850 employees**, with **63%** covered by a collective bargaining agreement with the United Steelworkers (USW) that is effective until September 27, 2025[39](index=39&type=chunk)[40](index=40&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces industry, operational, debt, and common stock risks, including competition, raw material volatility, and regulations - The steel industry is highly competitive with historical periods of excess global capacity, which can negatively affect domestic steel prices and the company's financial condition[53](index=53&type=chunk) - The company is dependent on key customers, with sales to its **10 largest customers** accounting for approximately **44% of net sales** for the year ended December 31, 2021[57](index=57&type=chunk) - The company is subject to extensive environmental, health, and safety regulations, which impose substantial costs, with future regulations related to climate change potentially increasing costs[65](index=65&type=chunk)[69](index=69&type=chunk) - As of December 31, 2021, approximately **63% of employees** were covered under a collective bargaining agreement expiring in September 2025, where a work stoppage could significantly disrupt operations[75](index=75&type=chunk) - The company has significant unfunded pension and retiree health care liabilities that will require future cash contributions, with funding levels dependent on factors like asset performance and interest rates[78](index=78&type=chunk) - The company's ability to use its net operating loss carryforwards of **$224.6 million** (as of Dec 31, 2021) to offset future taxable income may be limited by Section 382 of the Internal Revenue Code in the event of an ownership change[81](index=81&type=chunk)[82](index=82&type=chunk) - The COVID-19 pandemic continues to pose risks, including potential for reduced sales, supply chain disruptions, and increased operational and cybersecurity risks due to remote work arrangements[100](index=100&type=chunk) [Unresolved Staff Comments](index=15&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[108](index=108&type=chunk) [Properties](index=16&type=section&id=Item%202.%20Properties) TimkenSteel operates manufacturing facilities in Ohio and North Carolina, with 3.6 million square feet of owned and leased properties - The company's main manufacturing facilities are located in Canton and Eaton, Ohio, and Columbus, North Carolina[110](index=110&type=chunk) - The aggregate floor area of the company's facilities is **3.6 million square feet**, with the vast majority being owned rather than leased[110](index=110&type=chunk) [Legal Proceedings](index=16&type=section&id=Item%203.%20Legal%20Proceedings) Management expects ongoing legal proceedings to have no material adverse effect on the company's financial position - Management does not expect ongoing legal proceedings from the ordinary course of business to have a material adverse effect on the company's financials[112](index=112&type=chunk) [Executive Officers of the Registrant](index=16&type=section&id=Item%204A.%20Executive%20Officers%20of%20the%20Registrant) This section lists the executive officers of TimkenSteel as of February 24, 2022, including their key positions Executive Officers (as of Feb 24, 2022) | Name | Age | Position | | :--- | :--- | :--- | | Michael S. Williams | 61 | Chief Executive Officer and President | | Kristopher R. Westbrooks | 43 | Executive Vice President and Chief Financial Officer | | Kristine C. Syrvalin | 53 | Executive Vice President, General Counsel and Secretary | | Kevin A. Raketich | 55 | Executive Vice President, Sales, Marketing and Business Development | Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=17&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TimkenSteel's common shares trade on NYSE, with a $50 million share repurchase program authorized in December 2021 - On December 20, 2021, the Board of Directors authorized a share repurchase program for up to **$50 million** of the company's outstanding common shares[119](index=119&type=chunk) Securities Authorized for Issuance Under Equity Compensation Plans (as of Dec 31, 2021) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by security holders | 3,854,704 | $20.41 | 4,041,178 | | Not approved by security holders | 1,058,500 | — | — | | **Total** | **4,913,204** | **$20.41** | **4,041,178** | [Selected Financial Data](index=18&type=section&id=Item%206.%20Selected%20Financial%20Data) This section has been intentionally omitted from the report - Intentionally omitted[129](index=129&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales increased 54.4% to $1,282.9 million in 2021, driven by higher surcharges and shipment volume, with strong liquidity [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Net sales increased 54.4% to $1,282.9 million in 2021, driven by higher surcharges and shipment volumes, boosting gross profit Net Sales Comparison (2021 vs. 2020) | Metric | 2021 | 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,282.9M | $830.7M | +$452.2M | +54.4% | | Ship Tons | 818.6k | 640.4k | +178.2k | +27.8% | - The increase in 2021 net sales was driven by a **$272.1 million** increase in surcharges due to higher scrap/alloy prices and a **$220.5 million** increase from higher shipment volumes, partially offset by **$40.4 million** in unfavorable price/mix[142](index=142&type=chunk) - Gross profit for 2021 increased by **$204.4 million** compared to 2020, primarily due to favorable raw material spread, lower manufacturing costs, increased volume, and favorable inventory adjustments[145](index=145&type=chunk) - SG&A expense increased by **$0.5 million (0.7%)** in 2021, as higher variable compensation expense was largely offset by lower wages and benefits from headcount reductions[148](index=148&type=chunk) - The company recorded restructuring charges of **$6.7 million** in 2021, eliminating approximately **75 salaried positions**, with total restructuring actions eliminating ~290 salaried positions expected to yield ongoing annual savings of approximately **$39 million**[149](index=149&type=chunk)[150](index=150&type=chunk) - Impairment charges of **$10.6 million** were recorded in 2021, primarily **$7.9 million** related to the indefinite idling of the Harrison melt and casting assets[151](index=151&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity reached $510.7 million as of December 31, 2021, with $46.0 million in Convertible Senior Notes due 2025 Key Liquidity Measures (as of Dec 31) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $259.6M | $102.8M | | Availability not borrowed | $251.1M | $211.3M | | **Total liquidity** | **$510.7M** | **$314.1M** | - The company's primary liquidity sources are cash on hand, cash from operations, and its **$400 million** asset-based revolving credit facility, which matures in October 2024[162](index=162&type=chunk)[172](index=172&type=chunk) - The American Rescue Plan Act of 2021 (ARPA) provided pension funding relief, and the company now believes required contributions to its Bargaining Plan have been delayed until after 2031[181](index=181&type=chunk)[293](index=293&type=chunk) - Anticipated capital expenditures for 2022 are approximately **$40 million**, with over half allocated to profitability improvement projects[174](index=174&type=chunk) Cash Flow Summary | (in millions) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $196.9 | $173.5 | $70.3 | | Net cash used by investing activities | ($4.8) | ($6.0) | ($38.0) | | Net cash used by financing activities | ($35.3) | ($91.8) | ($26.8) | [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve estimates for asset impairment, deferred tax assets, and benefit plans, with significant pension obligations - Long-lived assets are reviewed for impairment when events indicate the carrying value may not be recoverable, with the company recording an impairment charge of **$10.6 million** in 2021[196](index=196&type=chunk)[200](index=200&type=chunk) - The company maintains a full valuation allowance on its net deferred tax assets in the U.S. as of December 31, 2021, concluding it is more likely than not that a portion will not be realized[201](index=201&type=chunk) Benefit Plan Obligations (as of Dec 31, 2021) | Plan Type | Projected Benefit Obligation | Underfunded Status | | :--- | :--- | :--- | | Pension | $1,319.2M | $143.2M | | Postretirement | $117.8M | $41.0M | Sensitivity of Benefit Plan Assumptions | Change in Assumption | Impact on Net Periodic Benefit Income | Impact on Benefit Obligation | | :--- | :--- | :--- | | **Discount Rate** | | | | +0.25% | +$1.9M | -$36.3M | | -0.25% | -$2.0M | +$38.0M | | **Return on Plan Assets** | | | | +0.25% | -$3.0M | N/A | | -0.25% | +$3.0M | N/A | [Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces commodity price risk for raw materials and energy, mitigated by supplier agreements and surcharges - As of December 31, 2021, the company had no outstanding variable-rate debt, thus a rise in interest rates would not impact interest expense at that time[215](index=215&type=chunk) - The company's primary market risk is commodity price fluctuation for raw materials (scrap steel, alloys) and energy (natural gas, electricity)[217](index=217&type=chunk) - To mitigate commodity price risk, the company uses supplier pricing agreements and a raw material surcharge mechanism to pass through cost changes to customers[217](index=217&type=chunk) [Financial Statements and Supplementary Data](index=33&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2021, including key figures like $1,282.9 million in net sales Consolidated Statement of Operations Highlights (Year Ended Dec 31) | (in millions, except per share) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net sales | $1,282.9 | $830.7 | $1,208.8 | | Gross Profit | $220.0 | $15.6 | $22.6 | | Income (Loss) Before Income Taxes | $176.7 | ($60.7) | ($126.1) | | Net Income (Loss) | $171.0 | ($61.9) | ($110.0) | | Diluted earnings (loss) per share | $3.18 | ($1.38) | ($2.46) | Consolidated Balance Sheet Highlights (as of Dec 31) | (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $259.6 | $102.8 | | Total Current Assets | $582.3 | $357.6 | | Total Assets | $1,158.9 | $994.0 | | Total Current Liabilities | $250.8 | $181.0 | | Total Liabilities | $494.3 | $486.5 | | Total Shareholders' Equity | $664.6 | $507.5 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=70&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting or financial disclosure - None[420](index=420&type=chunk) [Controls and Procedures](index=70&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[421](index=421&type=chunk) - Based on the COSO framework, management believes the company's internal control over financial reporting was effective as of December 31, 2021[423](index=423&type=chunk) [Other Information](index=70&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[425](index=425&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=71&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Required information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 proxy statement - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[427](index=427&type=chunk) [Executive Compensation](index=71&type=section&id=Item%2011.%20Executive%20Compensation) Required information on executive compensation is incorporated by reference from the 2022 Annual Meeting of Shareholders proxy statement - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[430](index=430&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=71&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Required information on security ownership is incorporated by reference from the 2022 Annual Meeting of Shareholders proxy statement - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[431](index=431&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=71&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Required information on related-party transactions and director independence is incorporated by reference from the 2022 proxy statement - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[432](index=432&type=chunk) [Principal Accounting Fees and Services](index=71&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Required information on principal accounting fees and services is incorporated by reference from the 2022 Annual Meeting of Shareholders proxy statement - Required information is incorporated by reference from the proxy statement for the 2022 Annual Meeting of Shareholders[433](index=433&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=72&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Annual Report on Form 10-K - This section provides a comprehensive list of all exhibits filed with the 10-K, including governance documents, material contracts, and executive certifications[435](index=435&type=chunk)

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents TimkenSteel Corporation's unaudited consolidated financial statements and detailed notes for the three and nine months ended September 30, 2021 and 2020 [Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) TimkenSteel reported significant improvements in net sales and profitability for both the three and nine months ended September 30, 2021, compared to the same periods in 2020, moving from net losses to substantial net income | Metric (Millions USD) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $343.7 | $205.9 | $944.6 | $619.5 | | Gross Profit | $66.7 | $(2.4) | $164.6 | $1.4 | | Income (Loss) Before Income Taxes | $50.6 | $(13.6) | $116.0 | $(48.5) | | Net Income (Loss) | $50.1 | $(13.9) | $113.9 | $(49.1) | | Basic EPS | $1.08 | $(0.31) | $2.49 | $(1.09) | | Diluted EPS | $0.94 | $(0.31) | $2.12 | $(1.09) | - Net sales increased by **66.9%** for the three months and **52.5%** for the nine months ended September 30, 2021, compared to the prior year periods[10](index=10&type=chunk) - The company achieved a gross profit of **$66.7 million** for the three months and **$164.6 million** for the nine months ended September 30, 2021, a significant turnaround from losses in the prior year[10](index=10&type=chunk) [Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(Unaudited)) The company reported comprehensive income for both the three and nine months ended September 30, 2021, a notable improvement from comprehensive losses in the prior year, primarily driven by the strong net income | Metric (Millions USD) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $50.1 | $(13.9) | $113.9 | $(49.1) | | Other comprehensive income (loss), net of tax | $(1.5) | $(0.3) | $(4.0) | $(4.5) | | Comprehensive Income (Loss), net of tax | $48.6 | $(14.2) | $109.9 | $(53.6) | [Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) As of September 30, 2021, TimkenSteel's total assets increased, primarily driven by higher cash, accounts receivable, and inventories, with a significant increase in shareholders' equity | Metric (Millions USD) | Sep 30, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Total Current Assets | $529.4 | $357.6 | | Total Assets | $1,116.4 | $994.0 | | Total Current Liabilities | $242.5 | $181.0 | | Total Liabilities | $495.8 | $486.5 | | Total Shareholders' Equity | $620.6 | $507.5 | - Cash and cash equivalents increased from **$102.8 million** at December 31, 2020, to **$172.0 million** at September 30, 2021[15](index=15&type=chunk) - Accounts receivable and inventories significantly increased, reflecting higher sales and production levels[15](index=15&type=chunk) [Consolidated Statements of Shareholders' Equity (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Unaudited)) Shareholders' equity increased significantly from December 31, 2020, to September 30, 2021, primarily due to net income and accounting standard adjustments | Metric (Millions USD) | Dec 31, 2020 | Sep 30, 2021 | | :-------------------- | :----------- | :----------- | | Total Shareholders' Equity | $507.5 | $620.6 | | Retained Deficit | $(363.4) | $(245.3) | | Additional Paid-in Capital | $843.4 | $829.5 | - Net income contributed **$113.9 million** to retained deficit reduction during the nine months ended September 30, 2021[17](index=17&type=chunk) - The adoption of ASU 2020-06 resulted in a **$10.6 million** decrease in additional paid-in capital and a **$4.2 million** reduction in retained deficit[17](index=17&type=chunk)[24](index=24&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Operating cash flow decreased due to increased working capital, while investing and financing activities used less cash due to lower debt repayments | Metric (Millions USD) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | | Net Cash Provided (Used) by Operating Activities | $106.2 | $121.0 | | Net Cash Provided (Used) by Investing Activities | $(0.9) | $(3.0) | | Net Cash Provided (Used) by Financing Activities | $(36.1) | $(70.3) | | Increase (Decrease) in Cash and Cash Equivalents | $69.2 | $47.7 | - The decrease in operating cash flow was primarily due to an increase in working capital, particularly inventory, to support increasing customer demand and production levels in 2021[138](index=138&type=chunk) - Financing cash outflow decreased due to lower repayments on outstanding borrowings and increased proceeds from stock option exercises[140](index=140&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes provide detailed explanations and disclosures for the unaudited consolidated financial statements, covering accounting policies, recent pronouncements, and various financial components [Note 1 - Basis of Presentation](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation) The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, with certain prior-period reclassifications - Statements are prepared in accordance with U.S. GAAP for interim financial information, not including all footnotes required for complete financial statements[21](index=21&type=chunk) - Certain items from prior periods were reclassified to conform with current year presentation[22](index=22&type=chunk) [Note 2 - Recent Accounting Pronouncements](index=9&type=section&id=Note%202%20-%20Recent%20Accounting%20Pronouncements) TimkenSteel adopted ASU 2019-12 with immaterial impact and early adopted ASU 2020-06, materially impacting the balance sheet by reclassifying convertible notes as a liability | Standard Adopted | Description | Adoption Impact | | :--------------- | :---------- | :-------------- | | ASU 2019-12, Income Taxes (Topic 740) | Simplifies accounting for income taxes | January 1, 2021: Immaterial impact on tax provision | | ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) | Simplifies accounting for convertible instruments and diluted EPS calculation | January 1, 2021: Material impact; all outstanding Convertible Notes classified as liability, no separate equity component, no debt discount amortization. Decreased additional paid-in capital by $10.6 million, increased current and non-current convertible notes by $1.1 million and $5.3 million respectively, and reduced retained deficit by $4.2 million. No effect on cash flows or liquidity | - The company took advantage of the CARES Act to defer **$6.4 million** in Social Security payroll taxes in 2020, payable in two equal installments by December 31, 2021, and December 31, 2022[26](index=26&type=chunk) - The ARPA is expected to materially impact the Company by delaying required contributions for domestic defined benefit pension plans until **2030** due to enhanced interest rate stabilization and extended amortization of funding shortfalls[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 3 - Revenue Recognition](index=10&type=section&id=Note%203%20-%20Revenue%20Recognition) Net sales significantly increased across all end-market sectors and product types for both the three and nine months ended September 30, 2021, driven by higher demand **Net Sales by End-Market Sector (Millions USD):** | End-Market Sector | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Mobile | $133.5 | $103.1 | $400.0 | $236.9 | | Industrial | $182.0 | $90.7 | $480.3 | $302.0 | | Energy | $20.4 | $7.0 | $41.4 | $46.8 | | Other | $7.8 | $5.1 | $22.9 | $33.8 | | **Total Net Sales** | **$343.7** | **$205.9** | **$944.6** | **$619.5** | **Net Sales by Product Type (Millions USD):** | Product Type | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Bar | $238.0 | $118.5 | $636.5 | $379.3 | | Tube | $43.8 | $21.6 | $120.8 | $77.6 | | Manufactured components | $54.1 | $61.4 | $164.3 | $149.8 | | Other | $7.8 | $4.4 | $23.0 | $12.8 | | **Total Net Sales** | **$343.7** | **$205.9** | **$944.6** | **$619.5** | [Note 4 - Restructuring Charges](index=11&type=section&id=Note%204%20-%20Restructuring%20Charges) TimkenSteel incurred restructuring charges of **$0.4 million** and **$2.0 million** for the three and nine months ended September 30, 2021, primarily due to severance from organizational changes **Restructuring Charges (Millions USD):** | Period | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Restructuring Charges | $0.4 | $2.0 | **Restructuring Reserve (Millions USD):** | Item | Balance at Dec 31, 2020 | Balance at Sep 30, 2021 | | :-------------------- | :---------------------- | :---------------------- | | Reserve Balance | $1.5 | $0.6 | - Approximately **15** salaried positions were eliminated through restructuring actions in 2021[36](index=36&type=chunk) - The remaining **$0.3 million** of charges for the nine months ended September 30, 2021, related to the discontinuation of specific small-diameter seamless mechanical tube manufacturing and the indefinite idling of Harrison melt and casting activities[36](index=36&type=chunk) [Note 5 - Disposition of Non-Core Assets](index=11&type=section&id=Note%205%20-%20Disposition%20of%20Non-Core%20Assets) TimkenSteel continued its disposition of non-core assets, including facility sales and idling operations, resulting in various gains, losses, and impairment charges - The company recognized impairment charges of **$0.3 million** in Q1 2021 for remaining TMS machinery and equipment classified as held for sale[40](index=40&type=chunk) - Non-cash charges of **$9.5 million** were recognized in Q1 2021 related to the write-down of Harrison melt and casting assets, including **$7.9 million** impairment of machinery and equipment[44](index=44&type=chunk) - The sale of TimkenSteel (Shanghai) Corporation Limited closed on July 30, 2021, generating **$6.2 million** in net cash proceeds and resulting in a **$1.1 million** loss on sale[45](index=45&type=chunk) [Note 6 – Other (Income) Expense, net](index=12&type=section&id=Note%206%20%E2%80%93%20Other%20(Income)%20Expense,%20net) Other (income) expense, net, shifted from income to expense for the nine months, primarily influenced by pension and postretirement non-service benefit income and remeasurement gains/losses, and a tax refund **Other (Income) Expense, net (Millions USD):** | Component | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Pension and postretirement non-service benefit (income) loss | $(9.2) | $(6.7) | $(28.0) | $(19.7) | | Loss (gain) from remeasurement of benefit plans | $2.7 | $(4.1) | $2.2 | $3.5 | | Sales and use tax refund | — | — | $(2.5) | — | | **Total other (income) expense, net** | **$(6.6)** | **$(10.6)** | **$(28.3)** | **$(16.0)** | - A full remeasurement of pension obligations and plan assets for the Salaried Plan was required each quarter in 2021 and 2020 due to lump sum payments exceeding service and interest costs[47](index=47&type=chunk) - A **$2.5 million** sales and use tax refund was recognized in Q2 2021 for an overpayment from 2016-2019[48](index=48&type=chunk) [Note 7 - Income Tax Provision](index=12&type=section&id=Note%207%20-%20Income%20Tax%20Provision) The provision for income taxes increased for both periods in 2021, with effective tax rates of **1.0%** and **1.8%**, primarily due to higher earnings in international jurisdictions and increased U.S. income **Income Tax Provision (Millions USD):** | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Provision (benefit) for income taxes | $0.5 | $0.3 | $2.1 | $0.6 | | Effective tax rate | 1.0% | (2.2)% | 1.8% | (1.2)% | - The effective tax rate is lower than the U.S. federal statutory rate of **21%** primarily due to a full valuation allowance on deferred tax assets in the U.S[51](index=51&type=chunk)[52](index=52&type=chunk) - The majority of TimkenSteel's income taxes are derived from foreign operations[52](index=52&type=chunk) [Note 8 - Earnings (Loss) Per Share](index=13&type=section&id=Note%208%20-%20Earnings%20(Loss)%20Per%20Share) Basic and diluted earnings per share significantly improved for the three and nine months ended September 30, 2021, with dilutive effects from equity-based awards and convertible notes **Earnings (Loss) Per Share:** | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic earnings (loss) per share | $1.08 | $(0.31) | $2.49 | $(1.09) | | Diluted earnings (loss) per share | $0.94 | $(0.31) | $2.12 | $(1.09) | **Weighted Average Shares Outstanding (Millions):** | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic | 46.2 | 45.0 | 45.8 | 45.0 | | Diluted | 53.9 | 45.0 | 55.2 | 45.0 | - For 2021, equity-based awards and convertible notes had a dilutive effect on EPS, while in 2020, they were anti-dilutive and excluded[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 9 - Inventories](index=14&type=section&id=Note%209%20-%20Inventories) Total inventories, net, increased to **$214.4 million** at September 30, 2021, driven by work in process and finished products, while inventory reserves decreased **Inventories, Net (Millions USD):** | Component | Sep 30, 2021 | Dec 31, 2020 | | :------------------ | :----------- | :----------- | | Manufacturing supplies | $27.7 | $37.6 | | Raw materials | $22.8 | $20.0 | | Work in process | $107.1 | $79.1 | | Finished products | $58.2 | $55.6 | | Gross inventory | $215.8 | $192.3 | | Allowance for inventory reserves | $(1.4) | $(13.9) | | **Total inventories, net** | **$214.4** | **$178.4** | - The allowance for inventory reserves decreased in 2021 due to sales of TimkenSteel Material Services (TMS) inventory and scrapping of aged inventory[61](index=61&type=chunk) [Note 10 - Financing Arrangements](index=14&type=section&id=Note%2010%20-%20Financing%20Arrangements) Total debt decreased to **$44.8 million** due to the settlement of 2021 Convertible Senior Notes, and 2025 Convertible Senior Notes are now classified as a current liability **Debt Summary (Millions USD):** | Debt Type | Sep 30, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Convertible Senior Notes due 2021 | — | $38.9 | | Convertible Senior Notes due 2025 | $44.8 | $39.3 | | **Total debt** | **$44.8** | **$78.2** | | Less current portion of debt | $44.8 | $38.9 | | Total non-current portion of debt | — | $39.3 | - The Convertible Senior Notes due 2021 matured on June 1, 2021, and were settled with **$38.9 million** cash and **0.1 million** shares[66](index=66&type=chunk) - The Convertible Senior Notes due 2025 (principal **$46.0 million**) are classified as a current liability as of September 30, 2021, because they became convertible at the option of holders from October 1 through December 31, 2021, due to the share price criterion being met[67](index=67&type=chunk)[68](index=68&type=chunk) **Convertible Notes Interest Expense (Millions USD):** | Component | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Contractual interest expense | $0.7 | $1.3 | $3.0 | $3.9 | | Amortization of debt issuance costs | $0.1 | $0.1 | $0.3 | $0.3 | | Amortization of debt discount | — | $1.1 | — | $3.3 | | **Total** | **$0.8** | **$2.5** | **$3.3** | **$7.5** | [Note 11 - Retirement and Postretirement Plans](index=16&type=section&id=Note%2011%20-%20Retirement%20and%20Postretirement%20Plans) Net periodic benefit cost (income) for pension plans shifted to an income of **$(8.0) million** in 2021, primarily due to higher expected returns on plan assets, with quarterly remeasurements **Net Periodic Benefit Cost (Income) (Millions USD):** | Component | 3 Months Ended Sep 30, 2021 (Pension) | 3 Months Ended Sep 30, 2021 (Postretirement) | 9 Months Ended Sep 30, 2021 (Pension) | 9 Months Ended Sep 30, 2021 (Postretirement) | | :-------------------- | :------------------------------------ | :------------------------------------------- | :------------------------------------ | :------------------------------------------- | | Service cost | $4.4 | $0.3 | $13.1 | $0.9 | | Interest cost | $8.9 | $0.9 | $27.2 | $2.5 | | Expected return on plan assets | $(16.8) | $(0.8) | $(50.7) | $(2.6) | | Amortization of prior service cost | $0.1 | $(1.5) | $0.2 | $(4.5) | | Net remeasurement (gains) losses | $2.7 | — | $2.2 | — | | **Net Periodic Benefit Cost (Income)** | **$(0.7)** | **$(1.1)** | **$(8.0)** | **$(3.7)** | - The Salaried Plan required a full remeasurement of pension obligations and plan assets each quarter in 2021 and 2020 because cumulative lump sum payments exceeded service and interest costs[74](index=74&type=chunk) [Note 12 – Stock-Based Compensation](index=16&type=section&id=Note%2012%20%E2%80%93%20Stock-Based%20Compensation) Stock-based compensation expense increased in 2021, with **938,995** time-based and **651,240** performance-based restricted stock units granted, and **$11.9 million** in future expense expected **Stock-Based Compensation Expense (Millions USD):** | Period | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Expense | $1.9 | $1.6 | $5.5 | $5.2 | - In the nine months ended September 30, 2021, **938,995** time-based restricted stock units (weighted average fair value **$7.70/share**) and **651,240** performance-based restricted stock units (weighted average fair value **$7.57/share**) were granted[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - Future stock-based compensation expense related to unvested awards is approximately **$11.9 million**, to be recognized through **2024**[78](index=78&type=chunk) [Note 13 - Accumulated Other Comprehensive Income (Loss)](index=17&type=section&id=Note%2013%20-%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated other comprehensive income (loss) decreased to **$36.4 million** at September 30, 2021, primarily due to pension and postretirement liability adjustments **Accumulated Other Comprehensive Income (Loss) (Millions USD):** | Component | Dec 31, 2020 | Sep 30, 2021 | | :-------------------- | :----------- | :----------- | | Foreign Currency Translation Adjustments | $(5.4) | $(5.1) | | Pension and Postretirement Liability Adjustments | $45.8 | $41.5 | | **Total** | **$40.4** | **$36.4** | - Net current period other comprehensive loss, net of income taxes, was **$(4.0) million** for the nine months ended September 30, 2021, mainly from pension and postretirement liability adjustments[79](index=79&type=chunk) [Note 14 – Contingencies](index=17&type=section&id=Note%2014%20%E2%80%93%20Contingencies) TimkenSteel maintains a contingency reserve for various loss exposures, with management believing their ultimate disposition will not materially adversely affect financial position **Contingency Reserve (Millions USD):** | Date | Reserve Balance | | :------------ | :-------------- | | Sep 30, 2021 | $2.3 | | Dec 31, 2020 | $1.0 | - The reserve balance increased from **$1.0 million** at December 31, 2020, to **$2.3 million** at September 30, 2021[80](index=80&type=chunk) [Note 15 – Subsequent Events](index=18&type=section&id=Note%2015%20%E2%80%93%20Subsequent%20Events) Subsequent events include a planned **$4 million** restructuring charge in Q4 2021 for an exit incentive program, and a **$2 million** contract ratification bonus for a new USW contract - A restructuring charge of approximately **$4 million** is anticipated in Q4 2021 for a voluntary exit incentive program, with cash severance payments primarily in 2022 and estimated annual savings of **$5 million**[81](index=81&type=chunk)[107](index=107&type=chunk) - A new four-year contract with USW Local 1123 was ratified on October 29, 2021, covering approximately **1,180** employees, resulting in a **$2 million** contract ratification bonus payable in Q4 2021[82](index=82&type=chunk)[90](index=90&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on TimkenSteel's financial performance, highlighting improvements in net sales and profitability, operational changes, and liquidity [Business Overview](index=19&type=section&id=Business%20Overview) TimkenSteel manufactures alloy, carbon, and micro-alloy steel products, consolidating melt and casting operations to the Faircrest facility and ratifying a new four-year contract with USW Local 1123 - TimkenSteel manufactures SBQ bars, seamless mechanical tubing, manufactured components, and billets, primarily from nearly **100%** recycled steel[84](index=84&type=chunk)[85](index=85&type=chunk) - All melt and casting activities are now consolidated at the Faircrest location, with annual melt capacity reduced to approximately **1.2 million tons** and shipment capacity to **0.9 million tons**[88](index=88&type=chunk)[89](index=89&type=chunk) - A new four-year contract with USW Local 1123, covering approximately **1,180** employees in Canton, Ohio, was ratified on October 29, 2021, effective until September 27, 2025[90](index=90&type=chunk) [Impact of Raw Material Prices](index=19&type=section&id=Impact%20of%20Raw%20Material%20Prices) TimkenSteel manages raw material price volatility through supplier pricing agreements and a raw material surcharge mechanism, which generally mitigates cost increases with a one-month lag - The company manages commodity risks primarily through supplier pricing agreements[92](index=92&type=chunk) - A raw material surcharge mechanism is used to mitigate the impact of increases or decreases in raw material costs, typically with a one-month lag effect[92](index=92&type=chunk) - While the surcharge generally protects gross profit, it can dilute gross margin as a percentage of sales[92](index=92&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) TimkenSteel experienced substantial improvements in net sales and gross profit for both periods in 2021, driven by increased surcharges, higher volumes, and favorable manufacturing costs and raw material spreads [Net Sales](index=20&type=section&id=Net%20Sales) Net sales increased significantly due to higher surcharges from increased scrap and alloy prices, and higher volumes driven by customer demand in industrial and mobile sectors **Net Sales (Millions USD):** | Period | 2021 | 2020 | Change ($) | Change (%) | | :----- | :--- | :--- | :--------- | :--------- | | 3 Months Ended Sep 30 | $343.7 | $205.9 | $137.8 | 66.9% | | 9 Months Ended Sep 30 | $944.6 | $619.5 | $325.1 | 52.5% | **Drivers of Net Sales Increase (3 Months Ended Sep 30, 2021 vs 2020):** | Driver | Impact (Millions USD) | | :----- | :-------------------- | | Surcharges | $89.9 | | Higher Volumes | $70.6 | | Unfavorable Price/Mix | $(22.7) | **Drivers of Net Sales Increase (9 Months Ended Sep 30, 2021 vs 2020):** | Driver | Impact (Millions USD) | | :----- | :-------------------- | | Surcharges | $191.2 | | Higher Volumes | $179.5 | | Unfavorable Price/Mix | $(45.6) | - Higher volumes for the three months ended September 30, 2021, were approximately **58 thousand ship tons**, primarily from industrial and energy sectors, partially offset by a **15 thousand ton** decrease in mobile due to the semiconductor chip shortage[94](index=94&type=chunk) - Higher volumes for the nine months ended September 30, 2021, were approximately **144 thousand ship tons**, primarily from mobile and industrial sectors, despite a **33 thousand ton** decrease in mobile due to the semiconductor chip shortage[96](index=96&type=chunk) [Gross Profit](index=21&type=section&id=Gross%20Profit) Gross profit significantly increased for both periods in 2021, driven by favorable manufacturing costs, raw material spread, and increased volume, with inventory adjustments also contributing positively **Gross Profit (Millions USD):** | Period | 2021 | 2020 | Change ($) | | :----- | :--- | :--- | :--------- | | 3 Months Ended Sep 30 | $66.7 | $(2.4) | $69.1 | | 9 Months Ended Sep 30 | $164.6 | $1.4 | $163.2 | - Favorable manufacturing costs were due to improved fixed cost leverage and labor productivity on higher production volumes, partially offset by higher variable compensation[98](index=98&type=chunk)[101](index=101&type=chunk) - Raw material spread was favorable due to higher scrap and alloy spreads[98](index=98&type=chunk)[101](index=101&type=chunk) - For the nine-month period, favorable inventory adjustments were noted, as additional reserves were recorded in 2020 due to market conditions[101](index=101&type=chunk) [Selling, General and Administrative Expenses](index=23&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) Selling, General and Administrative (SG&A) expenses increased for both periods in 2021, primarily due to higher variable compensation, partially offset by lower wages and benefits from reduced headcount **SG&A Expense (Millions USD):** | Period | 2021 | 2020 | Change ($) | Change (%) | | :----- | :--- | :--- | :--------- | :--------- | | 3 Months Ended Sep 30 | $19.9 | $17.9 | $2.0 | 11.2% | | 9 Months Ended Sep 30 | $60.4 | $58.1 | $2.3 | 4.0% | - The increase was primarily due to higher variable compensation in the current year[104](index=104&type=chunk) - This was partially offset by lower wages and benefits expense resulting from a reduction in employee headcount due to restructuring[104](index=104&type=chunk) [Restructuring Charges](index=23&type=section&id=Restructuring%20Charges) Restructuring charges totaled **$0.4 million** and **$2.0 million** for the three and nine months ended September 30, 2021, as part of ongoing organizational changes that eliminated approximately **230** salaried positions **Restructuring Charges (Millions USD):** | Period | 2021 | | :----- | :--- | | 3 Months Ended Sep 30 | $0.4 | | 9 Months Ended Sep 30 | $2.0 | - Approximately **230** salaried positions have been eliminated through restructuring actions over several years, resulting in ongoing annual savings of approximately **$30 million**[106](index=106&type=chunk) - A restructuring charge of approximately **$4 million** is anticipated in Q4 2021 for a voluntary exit incentive program, with estimated annual savings of **$5 million**[107](index=107&type=chunk) [Interest Expense](index=23&type=section&id=Interest%20Expense) Interest expense decreased significantly for both periods in 2021, primarily due to the adoption of ASU 2020-06, which eliminated debt discount amortization, and a reduction in outstanding borrowings **Interest Expense (Millions USD):** | Period | 2021 | 2020 | Change ($) | | :----- | :--- | :--- | :--------- | | 3 Months Ended Sep 30 | $1.2 | $3.0 | $(1.8) | | 9 Months Ended Sep 30 | $4.7 | $9.2 | $(4.5) | - The decrease was primarily due to the adoption of ASU 2020-06 on January 1, 2021, which eliminated the amortization of debt discount for Convertible Notes[109](index=109&type=chunk) - A reduction in outstanding borrowings also contributed to the decrease[109](index=109&type=chunk) [Other (Income) Expense, net](index=24&type=section&id=Other%20(Income)%20Expense,%20net) Other (income) expense, net, decreased for the three months but increased for the nine months ended September 30, 2021, mainly influenced by pension and postretirement non-service benefit income, remeasurement gains/losses, and a **$2.5 million** tax refund **Other (Income) Expense, net (Millions USD):** | Component | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | | :-------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Pension and postretirement non-service benefit (income) loss | $(9.2) | $(6.7) | $(2.5) | $(28.0) | $(19.7) | $(8.3) | | Loss (gain) from remeasurement benefit plan | $2.7 | $(4.1) | $6.8 | $2.2 | $3.5 | $(1.3) | | Sales and use tax refund | — | — | — | $(2.5) | — | $(2.5) | | **Total other (income) expense, net** | **$(6.6)** | **$(10.6)** | **$4.0** | **$(28.3)** | **$(16.0)** | **$(12.3)** | - A **$2.5 million** sales and use tax refund was recognized in Q2 2021[112](index=112&type=chunk) - Full remeasurements of pension obligations and plan assets were completed each quarter in 2021 and 2020[111](index=111&type=chunk) [Provision for Income Taxes](index=24&type=section&id=Provision%20for%20Income%20Taxes) The provision for income taxes increased for both periods in 2021, with effective tax rates of **1.0%** and **1.8%**, while maintaining a full valuation allowance for U.S. deferred tax assets **Provision for Income Taxes (Millions USD):** | Period | 2021 | 2020 | Change ($) | | :----- | :--- | :--- | :--------- | | 3 Months Ended Sep 30 | $0.5 | $0.3 | $0.2 | | 9 Months Ended Sep 30 | $2.1 | $0.6 | $1.5 | **Effective Tax Rate:** | Period | 2021 | 2020 | | :----- | :--- | :--- | | 3 Months Ended Sep 30 | 1.0% | (2.2)% | | 9 Months Ended Sep 30 | 1.8% | (1.2)% | - The company maintains a full valuation allowance for U.S. deferred tax assets[114](index=114&type=chunk) - The majority of income tax expense is derived from foreign, state, and local taxes[114](index=114&type=chunk) [Non-GAAP Financial Measures](index=25&type=section&id=Non-GAAP%20Financial%20Measures) This section presents net sales by end-market sector, adjusted to exclude surcharges, providing additional insight into base price and product mix drivers [Net Sales, Excluding Surcharges](index=25&type=section&id=Net%20Sales,%20Excluding%20Surcharges) Net sales, excluding surcharges (Base Sales), increased for both periods in 2021, reflecting growth in underlying demand and pricing, particularly in the mobile and industrial sectors **Net Sales, Excluding Surcharges (Millions USD, Tons in Thousands):** | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Net Sales | $343.7 | $205.9 | $944.6 | $619.5 | | Less: Surcharges | $121.0 | $31.1 | $292.5 | $101.3 | | **Base Sales** | **$222.7** | **$174.8** | **$652.1** | **$518.2** | | Total Tons | 212.7 | 154.3 | 620.3 | 476.4 | | Base Sales / Ton | $1,047 | $1,133 | $1,051 | $1,088 | - Base Sales increased by **$47.9 million (27.4%)** for the three months and **$133.9 million (25.8%)** for the nine months ended September 30, 2021, excluding surcharges[94](index=94&type=chunk)[96](index=96&type=chunk) - Surcharges per ton significantly increased from **$201** in Q3 2020 to **$569** in Q3 2021, and from **$212** in 9M 2020 to **$472** in 9M 2021, reflecting higher raw material prices[117](index=117&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) TimkenSteel's total liquidity significantly increased to **$444.4 million** as of September 30, 2021, driven by higher cash and increased availability under the Amended Credit Agreement [Amended Credit Agreement](index=26&type=section&id=Amended%20Credit%20Agreement) As of September 30, 2021, TimkenSteel had **$272.4 million** available under its Amended Credit Agreement, with no outstanding borrowings, and was in compliance with all covenants - Amount available under the Amended Credit Agreement was **$272.4 million** as of September 30, 2021[64](index=64&type=chunk)[126](index=126&type=chunk) - No outstanding borrowings on the Credit Agreement as of September 30, 2021[65](index=65&type=chunk)[126](index=126&type=chunk) - The company is in compliance with all covenants outlined in the Amended Credit Agreement[65](index=65&type=chunk) [Convertible Notes](index=26&type=section&id=Convertible%20Notes) The Convertible Senior Notes due 2021 were settled, and the 2025 Convertible Senior Notes (principal **$46.0 million**) became convertible, leading to their classification as a current liability - Convertible Senior Notes due 2021 matured on June 1, 2021, and were settled with **$38.9 million** cash and **0.1 million** shares[120](index=120&type=chunk) - The Convertible Senior Notes due 2025 (principal **$46.0 million**) became convertible at the option of holders from October 1 through December 31, 2021, due to the share price criterion being met[123](index=123&type=chunk) - As a result, the Convertible Senior Notes due 2025 are classified as a current liability[68](index=68&type=chunk) [Additional Liquidity Considerations](index=27&type=section&id=Additional%20Liquidity%20Considerations) Total liquidity increased to **$444.4 million** as of September 30, 2021, and management believes current liquidity sources are sufficient for the next twelve months **Key Liquidity Measures (Millions USD):** | Metric | Sep 30, 2021 | Dec 31, 2020 | | :----- | :----------- | :----------- | | Cash and cash equivalents | $172.0 | $102.8 | | Availability not borrowed (Credit Agreement) | $272.4 | $211.3 | | **Total liquidity** | **$444.4** | **$314.1** | - Management believes current cash balance, projected cash from operations, and credit availability will be sufficient for working capital, capital expenditures, debt servicing, and pension obligations for at least the next twelve months[127](index=127&type=chunk) [Coronavirus Aid, Relief, and Economic Security Act (CARES Act)](index=27&type=section&id=Coronavirus%20Aid,%20Relief,%20and%20Economic%20Security%20Act%20(CARES%20Act)) TimkenSteel deferred **$6.4 million** in Social Security payroll taxes in 2020 under the CARES Act, with payments due by December 31, 2021, and December 31, 2022 - Deferred **$6.4 million** in employer share of Social Security payroll taxes in 2020, payable in two equal installments by December 31, 2021, and December 31, 2022[130](index=130&type=chunk) - Accrued a **$2.3 million** Employee Retention Credit benefit in Q4 2020, filed for in Q2 2021[131](index=131&type=chunk) [Consolidated Appropriations Act, 2021 (CAA)](index=27&type=section&id=Consolidated%20Appropriations%20Act,%202021%20(CAA)) The Consolidated Appropriations Act, 2021, extended the Employee Retention Credit into 2021, but is not expected to impact TimkenSteel as employee furloughs ceased in 2020 - The CAA extended the Employee Retention Credit into 2021, but is not expected to impact the company as employee furloughs ceased in 2020[132](index=132&type=chunk)[133](index=133&type=chunk) [American Rescue Plan Act of 2021 (ARPA)](index=28&type=section&id=American%20Rescue%20Plan%20Act%20of%202021%20(ARPA)) The American Rescue Plan Act of 2021 is expected to materially impact TimkenSteel by delaying required contributions for its domestic defined benefit pension plans until **2030** - ARPA is expected to materially impact the company by delaying required contributions for domestic defined benefit pension plans until **2030**[134](index=134&type=chunk)[135](index=135&type=chunk) - This delay is due to enhanced interest rate stabilization and extended amortization of funding shortfalls provided by ARPA[135](index=135&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20Flows) Net cash provided by operating activities decreased due to increased working capital, while investing and financing activities used less cash due to lower debt repayments **Cash Flows (Millions USD):** | Category | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :------- | :-------------------------- | :-------------------------- | | Operating Activities | $106.2 | $121.0 | | Investing Activities | $(0.9) | $(3.0) | | Financing Activities | $(36.1) | $(70.3) | | Increase (Decrease) in Cash and Cash Equivalents | $69.2 | $47.7 | - Operating cash flow decreased due to an increase in working capital (principally inventory) to support increasing customer demand and production levels in 2021[138](index=138&type=chunk) - Investing cash flow change was primarily due to lower capital expenditures and proceeds from the sale of TimkenSteel (Shanghai) Corporation Limited[139](index=139&type=chunk) - Financing cash flow change was primarily due to lower repayments on outstanding borrowings and increased proceeds from stock option exercises[140](index=140&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) TimkenSteel's financial statements are prepared using U.S. GAAP, requiring management to make estimates and assumptions that affect reported amounts, with critical policies reviewed throughout the year - Financial statements are prepared in accordance with U.S. GAAP, requiring management estimates and assumptions[142](index=142&type=chunk) - Critical accounting policies are reviewed throughout the year[142](index=142&type=chunk) [New Accounting Guidance](index=29&type=section&id=New%20Accounting%20Guidance) For information on new accounting guidance, refer to Note 2 - Recent Accounting Pronouncements in the unaudited Consolidated Financial Statements - Refer to Note 2 - Recent Accounting Pronouncements for details on new accounting guidance[143](index=143&type=chunk) [Forward-Looking Statements](index=29&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future events and outcomes, cautioning that actual results may differ materially due to various factors, and the company undertakes no obligation to update these statements - Forward-looking statements are subject to various factors that may cause actual results to differ materially[144](index=144&type=chunk) - Key risk factors include deterioration in world economic conditions, climate-related risks, fluctuations in customer demand, impact of COVID-19, competitive factors, changes in operating costs, success of operating plans, litigation, financing availability, and pension obligations[145](index=145&type=chunk)[150](index=150&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statement[147](index=147&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) TimkenSteel is exposed to market risks related to interest rates, foreign currency exchange rates, and commodity prices, which are managed through various strategies [Interest Rate Risk](index=30&type=section&id=Interest%20Rate%20Risk) As of September 30, 2021, TimkenSteel's **$46.0 million** outstanding debt consists entirely of fixed-rate debt, mitigating immediate interest rate risk - All **$46.0 million** of outstanding debt as of September 30, 2021, has fixed interest rates[148](index=148&type=chunk) - A rise in interest rates would not impact the company's interest expense at this point[148](index=148&type=chunk) [Foreign Currency Exchange Rate Risk](index=30&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) TimkenSteel's foreign currency exchange rate risk is limited as its sales are primarily to U.S. customers, though currency fluctuations could indirectly impact the company - Sales are primarily to customers in the United States, limiting direct foreign currency exchange rate risk[149](index=149&type=chunk) - Currency fluctuations could indirectly impact the company through raw material prices or competitors' foreign operations[149](index=149&type=chunk) [Commodity Price Risk](index=30&type=section&id=Commodity%20Price%20Risk) TimkenSteel is exposed to commodity price fluctuations for raw materials and energy, managed through supplier pricing agreements and a raw material surcharge mechanism to pass through cost increases - Exposed to market risk from commodity price fluctuations, primarily for raw materials (scrap steel, metals, alloys) and energy (natural gas, electricity)[150](index=150&type=chunk) - Manages exposure through supplier pricing agreements and a raw material surcharge mechanism to pass through cost increases[150](index=150&type=chunk) - The surcharge mechanism effectively reduces time lag in passing through higher raw material costs in periods of stable demand, but impacts sales prices less when demand and costs are lower[150](index=150&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that TimkenSteel's disclosure controls and procedures were effective as of September 30, 2021, with no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=31&type=section&id=Disclosure%20Controls%20and%20Procedures) TimkenSteel's management, including the principal executive and financial officers, evaluated and concluded that the company's disclosure controls and procedures were effective - Disclosure controls and procedures were evaluated and deemed effective as of the end of the reporting period[151](index=151&type=chunk) [Changes in Internal Control Over Financial Reporting](index=31&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There have been no material changes in TimkenSteel's internal control over financial reporting during the most recent fiscal quarter - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[152](index=152&type=chunk) [Part II. Other Information](index=30&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) TimkenSteel is involved in various claims and legal actions, but management believes their ultimate disposition will not have a material adverse effect on the company's financial position - Involved in various claims and legal actions arising in the ordinary course of business[153](index=153&type=chunk) - Management believes the ultimate disposition of these matters will not have a material adverse effect on financial position, results of operations, or cash flows[153](index=153&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) For a comprehensive discussion of the risks and uncertainties affecting TimkenSteel's business, readers are directed to the Risk Factors section in the company's Annual Report on Form 10-K - Refer to the Risk Factors section in the Annual Report on Form 10-K for the year ended December 31, 2020, for a discussion of business risks and uncertainties[154](index=154&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL documents **Exhibits Filed:** | Exhibit Number | Exhibit Description | | :------------- | :------------------ | | 31.1* | Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2* | Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1** | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS* | Inline XBRL Instance Document | | 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | | 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | [Signatures](index=33&type=section&id=Signatures) The report is duly signed on behalf of TimkenSteel Corporation by Kristopher R. Westbrooks, Executive Vice President and Chief Financial Officer, on November 4, 2021 - The report was signed by Kristopher R. Westbrooks, Executive Vice President and Chief Financial Officer, on November 4, 2021[160](index=160&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-36313 TIMKENSTEEL CORPORATION (Exact name of registrant as specified in its charter) (Registrant's telephone number, including area code) Sec ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-36313 TIMKENSTEEL CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-36313 TIMKENSTEEL CORPORATION (Exact name of registrant as specified in its charter) Ohio 46-4024951 (State or other jurisdiction of incorporatio ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-36313 TIMKENSTEEL CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdiction of i ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-36313 TIMKENSTEEL CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorp ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-36313 TIMKENSTEEL CORPORATION (Exact name of registrant as specified in its charter) 1835 Dueber Avenue SW, Canton, OH 447 ...