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TimkenSteel Q2 earnings beat estimates, but shipments neared all-time low

Aug. 07, 2020 3:22 PM ETMetallus Inc. (MTUS) StockMTUSBy: Vandana Singh, SA News Editor
  • Business shutdowns caused by the coronavirus pandemic pushed shipments by TimkenSteel (TMST +8.0%) toward all-time lows in Q2.
  • During the quarter, shipment dropped 56% Y/Y to 108,700 tons of steel, the lowest level for a quarter in more than 30 years.
  • Hardest hit were automotive markets, which experienced significant production disruptions; oil and natural gas market also saw declines, and that is expected to continue.
  • Net sales of $154M fell 54% and reported smaller than expected loss of $15.3M, though wider than loss of $11.9M, a year ago.
  • TimkenSteel's CFO, Kristopher Westbrooks, in conference call said steel shipments hit the lowest level in May with 30,000 tons shipped. Shipments showed improvement during June as the automotive industry resumed production. The company has seen automotive industry orders improve and that more orders are expected. But the recovery has been choppy and demand hasn’t returned to first quarter levels.
  • TimkenSteel took what it described as “aggressive action” because of the pandemic to reduce costs. The company said its pandemic-related moves saved ~ $7M in cash and reduced administrative expenses by ~$5M.
  • Because the extent and duration of the pandemic remains uncertain, the company isn’t providing guidance on shipments and earnings during Q3.
  • The company further reduced CapEx and now expect to spend between $15-$20M, in 2020, lower than the previous outlook of $25M.

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