TimkenSteel(TMST) - 2025 Q3 - Quarterly Report

Financial Performance - Net sales for the three months ended September 30, 2025, were $305.9 million, an increase of $78.7 million, or 34.6% compared to the same period in 2024, driven by higher shipments and favorable surcharges [84]. - For the nine months ended September 30, 2025, net sales were $891.0 million, an increase of $47.5 million, or 5.6% compared to the same period in 2024, primarily due to higher shipments and surcharges [87]. - Gross profit for the three months ended September 30, 2025, increased by $22.9 million, or 189.3% compared to the same period in 2024, attributed to higher volume and favorable raw material spread [90]. - Gross profit for the nine months ended September 30, 2025, increased by $2.3 million, or 2.6% compared to the same period in 2024, driven by higher volume and favorable raw material spread [94]. - For the three months ended September 30, 2025, total net sales reached $305.9 million, a significant increase from $227.2 million in the same period of 2024, representing a year-over-year growth of approximately 34.5% [106]. - Base sales for the nine months ended September 30, 2025, amounted to $701.8 million, up from $669.3 million in the same period of 2024, reflecting a growth of approximately 4.0% [107]. Liquidity and Capital Expenditures - The company reported total liquidity of $436.9 million, including cash and cash equivalents of $191.5 million as of September 30, 2025 [81]. - Capital investments amounted to $28.4 million and $73.7 million for the three and nine months ended September 30, 2025, respectively, focusing on safety and equipment automation [79]. - The company incurred $44.0 million in net cash used by investing activities for the nine months ended September 30, 2025, compared to $3.6 million in the same period of 2024, highlighting increased capital expenditures [122]. - As of September 30, 2025, total liquidity was reported at $436.9 million, slightly down from $458.6 million as of December 31, 2024 [112]. - The company expects capital expenditures to be approximately $120 million in 2025, including around $90 million funded by the U.S. government [114]. Shareholder Actions - The company repurchased 0.2 million and 0.9 million common shares at a cost of $3.0 million and $11.9 million for the three and nine months ended September 30, 2025, respectively [81]. - The company repurchased approximately 0.9 million common shares at an aggregate cost of $11.9 million during the nine months ended September 30, 2025, with an average repurchase price of $14.31 per share [118]. Operating Expenses and Taxation - SG&A expenses for the three months ended September 30, 2025, increased by $2.0 million, or 8.9%, primarily due to higher variable compensation and benefits [97]. - The effective tax rate for the three months ended September 30, 2025, was 25.7%, compared to 16.9% in the same period in 2024, reflecting a taxable income position [100]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $17.9 million, a decrease from $26.4 million in the same period of 2024, primarily due to higher working capital needs [121]. Government Contracts - The company received $10.0 million and $28.0 million from the U.S. government for defense contracts during the three and nine months ended September 30, 2025, respectively [79]. Risks and Challenges - The company emphasizes the uncertainty of future results due to various factors, including customer demand fluctuations and economic conditions [126]. - The company faces competitive pressures from both domestic and foreign competitors, which may affect market penetration and pricing strategies [129]. - The company is monitoring the impacts of global economic conditions, including potential slowdowns and political risks in regions where it operates [129]. - The company is aware of cyber-related risks, including potential IT system failures and security breaches [129]. - The company is evaluating the potential impacts of pandemics and health issues on its operations [129]. - There have been no material changes in the company's exposure to market risk since December 31, 2024 [130]. - The company is assessing the availability of financing and interest rates, which could influence its capital-raising capabilities [129]. - The company is addressing sustainability challenges, including the complexity of commodity supply chains and the need for effective traceability practices [129]. - The company is investing in equipment to support the U.S. Army's munitions production, contingent on timely funding and successful installation [129]. Debt Obligations - The principal amount of the Convertible Senior Notes due 2025 was $46.0 million, with a total cash payment of $9.1 million made to the noteholder during the second quarter of 2025 [110]. - As of September 30, 2025, cash and cash equivalents were reported at $191.5 million, down from $240.7 million as of December 31, 2024 [112].