TimkenSteel(TMST) - 2022 Q4 - Annual Report

Financial Performance - Net sales for the year ended December 31, 2022, were $1,329.9 million, an increase from $1,282.9 million in 2021, representing a growth of 3.3%[265] - Gross profit decreased to $126.7 million in 2022 from $220.0 million in 2021, reflecting a decline of 42.4%[265] - Net income for 2022 was $65.1 million, down from $171.0 million in 2021, indicating a decrease of 61.9%[265] - Comprehensive income for 2022 was $59.1 million, down from $151.3 million in 2021, reflecting a significant decline in overall profitability[267] - Cash provided by operating activities was $134.5 million in 2022, down from $196.9 million in 2021, indicating a decline of about 31.6%[274] - Income from operations before income taxes for 2022 was $97.1 million, a decrease from $176.7 million in 2021[344] - The provision for income taxes for the year ended December 31, 2022, was $32.0 million, compared to $5.7 million in 2021[346] - The effective tax rate for 2022 was 32.9%, significantly higher than 3.2% in 2021[346] - For the year ended December 31, 2022, net income was $65.1 million, down from $171.0 million in 2021, resulting in diluted earnings per share of $1.30 compared to $3.18 in 2021[365] Debt and Financial Obligations - As of December 31, 2022, the company had $20.8 million of aggregate debt outstanding, with none having variable interest rates, thus insulating it from immediate interest rate increases[240] - The company reported a loss on extinguishment of debt amounting to $43.1 million in 2022, compared to no such loss in 2021[265] - The company repurchased $25.2 million of outstanding principal related to convertible notes, reducing weighted average diluted shares outstanding by 2.3 million shares for the year ended December 31, 2022[362] - The Company repurchased a total of $25.2 million aggregate principal amount of its Convertible Senior Notes due 2025 in the first half of 2022, recognizing a loss on extinguishment of debt of $43.0 million[402] - As of December 31, 2022, total debt was $20.4 million, a significant decrease from $44.9 million in 2021[377] Assets and Liabilities - Total assets decreased to $1,082.0 million in 2022 from $1,158.9 million in 2021, indicating a reduction of approximately 6.5%[269] - Current liabilities decreased to $186.7 million in 2022 from $250.8 million in 2021, a reduction of about 25.6%[269] - Shareholders' equity increased to $686.5 million in 2022 from $664.6 million in 2021, reflecting a growth of approximately 3.0%[269] - Long-lived assets in the United States decreased to $503.0 million in 2022 from $530.7 million in 2021, reflecting asset management strategies[317] - The total liabilities recognized on the balance sheet for pension and postretirement benefit plans amounted to $(117.3) million as of December 31, 2022[430] Pension and Retirement Plans - The company's aggregate defined benefit pension and other postretirement benefit obligation was $754.0 million as of December 31, 2022, exceeding the fair value of plan assets of $608.6 million, resulting in an unfunded obligation of $145.4 million[252] - A net gain of $35.4 million from the remeasurement of benefit plans was recognized for the year ended December 31, 2022, driven by a $359.9 million decrease in pension liability due to increased discount rates[339] - The benefit obligation for pension and postretirement plans at the end of 2022 was $666.6 million, with significant actuarial gains primarily due to an increase in discount rates[420] - The fair value of plan assets at the end of 2022 was $549.4 million, resulting in a funded status deficit of $117.2 million[423] - The Company expects to purchase an irrevocable annuity contract for the Salaried Plan in 2023, following its termination effective March 31, 2022[415] Operational and Strategic Initiatives - The company has implemented supplier pricing agreements to manage exposure to commodity price risks, particularly for raw materials and energy[243] - The company maintained effective internal control over financial reporting as of December 31, 2022, according to the auditors' opinion[257] - TimkenSteel's annual melt capacity is approximately 1.2 million tons and shipment capacity is approximately 0.9 million tons after idling the Harrison melt and casting assets[277] - The mobile sector generated $539.1 million in revenue for 2022, up from $527.9 million in 2021, while the industrial sector saw a decrease to $628.7 million from $661.2 million[318] - The company recognized revenue from contracts at a point in time when it has satisfied its performance obligation[281] Shareholder Actions - The company repurchased $52.0 million in treasury shares during 2022, reflecting a strategic move to enhance shareholder value[274] - The Company has a share repurchase program authorized for up to $75.0 million, reflecting confidence in sustainable profitability[408] - As of February 24, 2023, the Company has $68.5 million remaining under its authorized share repurchase program after repurchasing an additional 0.2 million shares for $4.5 million at an average price of $19.19 per share[410] Tax and Regulatory Matters - The company recognizes interest and penalties related to unrecognized tax benefits within the provision for income taxes[302] - The company recognized a gain of $2.5 million from a tax refund related to overpayment of sales and use taxes for the period of October 1, 2016, through September 30, 2019[342] - The company accrued a benefit of $2.3 million related to the Employee Retention Credit in the fourth quarter of 2020, with total proceeds received amounting to $2.3 million by the first quarter of 2022[314]