TimkenSteel(TMST) - 2024 Q2 - Quarterly Results

Financial Performance - Second-quarter 2024 net sales were $294.7 million, a decrease of 8% from $321.6 million in the first quarter 2024 and a 17% decline from $356.6 million in the second quarter 2023[5][2] - Net income for the second quarter 2024 was $4.6 million, or $0.10 per diluted share, compared to $24.0 million, or $0.52 per diluted share in the first quarter 2024 and $28.9 million, or $0.62 per diluted share in the second quarter 2023[1][2] - Net sales for the three months ended June 30, 2024, were $294.7 million, a decrease of 17.4% compared to $356.6 million for the same period in 2023[20] - Gross profit for the six months ended June 30, 2024, was $74.7 million, down 20.5% from $94.1 million in the prior year[20] - Net income for the three months ended June 30, 2024, was $4.6 million, a decline of 84.1% compared to $28.9 million for the same period in 2023[20] - Basic earnings per share for the three months ended June 30, 2024, were $0.10, down 84.8% from $0.66 in the same period last year[20] - For the six months ended June 30, 2024, the company reported a net income of $28.6 million, with diluted earnings per share of $0.71, compared to a net income of $43.3 million and diluted earnings per share of $1.03 for the same period in 2023[34] - Adjusted net income for the three months ended June 30, 2024, was $6.7 million, compared to $27.6 million for the same period in 2023[28] - Adjusted net income for the six months ended June 30, 2024, was $32.8 million, while adjusted diluted earnings per share was $0.71, compared to adjusted net income of $48.4 million and adjusted diluted earnings per share of $1.03 for the same period in 2023[34] Operational Metrics - Ship tons for the second quarter 2024 totaled 150,100, down 3% sequentially and 15% year-over-year, primarily due to lower shipments in industrial and energy markets[5] - Average melt utilization rate is expected to increase in the third quarter while balancing production with demand[10] - Metallus experienced a decrease in ship tons for the industrial segment, reporting 56.4 thousand tons in Q2 2024 compared to 70.2 thousand tons in Q2 2023[40][41] - The aerospace defense segment reported net sales of $43.7 million for Q2 2024, with a base sales per ton of $2,342[40] Cash Flow and Liquidity - Operating cash flow for the second quarter was $8.3 million, with cash and cash equivalents at $272.8 million as of June 30, 2024[7] - Total current assets decreased to $606.8 million as of June 30, 2024, from $656.8 million at the end of 2023, reflecting a decline of 7.6%[20] - Total liabilities decreased to $384.1 million as of June 30, 2024, down 13.4% from $443.7 million at the end of 2023[20] - Cash and cash equivalents were $272.8 million as of June 30, 2024, a slight decrease from $280.6 million at the end of 2023[20] - The total liquidity as of June 30, 2024, was $512.1 million, down from $539.4 million as of December 31, 2023[47] Costs and Expenditures - Manufacturing costs increased by $13.1 million sequentially and $19.3 million year-over-year, attributed to lower fixed cost leverage on decreased production volume[6] - Planned capital expenditures for 2024 are approximately $55 million, a reduction of $5 million from previous guidance[10] - Required pension contributions are estimated at $3 million in the third quarter and an additional $5 million in the fourth quarter 2024[10] - The company incurred IT transformation costs of $2.5 million for the six months ended June 30, 2024, compared to $2.1 million for the same period in 2023[34] - The company’s business transformation costs for the six months ended June 30, 2024 were $0.6 million, compared to $0.1 million for the same period in 2023[37] Other Financial Highlights - The company received a $10 million initial payment from the U.S. Army as part of a funding agreement for up to $99 million to support munitions production[7] - The company reported a loss on extinguishment of debt of $11.4 million in the six months ended June 30, 2023[20] - The company recognized an insurance recovery of $11.3 million related to unplanned operational downtime, with $9.8 million recorded in Q1 2023 and $1.5 million in Q2 2023[35] - The company recognized an insurance recovery of $11.3 million in the first half of 2023, with $9.8 million recorded in Q1 and $1.5 million in Q2[39] - The company reported a loss on the sale or disposal of assets of $0.2 million for the three months ended June 30, 2024[23] - Stock-based compensation expense for the three months ended June 30, 2024, was $3.5 million, compared to $2.9 million for the same period in 2023[23] - The company recognized pension and postretirement expense of $2.1 million for the three months ended June 30, 2024, slightly up from $2.0 million for the same period in 2023[23] Market Outlook - The company expects adjusted EBITDA to decline sequentially in the third quarter 2024 due to weaker market demand[8] - The company’s adjusted EBITDA for Q2 2024 remained stable at $20 million, consistent with Q1 2024[50] - Surcharges for the automotive segment were $364 per ton in Q2 2024, compared to $472 per ton in Q2 2023[41] - The company aims to enhance clarity of core pricing and results by presenting net sales adjusted to exclude surcharges, which can introduce volatility[39]