TimkenSteel Corporation Announces Updated Guidance for Third-Quarter 2015
CANTON, Ohio, Sept. 11, 2015 /PRNewswire/ -- TimkenSteel (NYSE: TMST) (timkensteel.com), a leader in customized alloy steel products and services, expects EBITDA for the third quarter of 2015 to be a loss of between $30 million and $40 million. The company updated guidance after experiencing a steeper-than-expected drop in industrial demand driven by depressed commodity prices.
"We anticipated a difficult third quarter due to continued weakness in energy and some industrial end markets, but the impact is deeper than expected," said Ward J. "Tim" Timken, Jr., chairman, CEO and president. "We're holding our share of these markets, but overall demand has dropped. Lower demand in industrial markets accompanied by higher manufacturing costs associated with melt utilization of 40 percent will result in a greater loss than we had in the second quarter.
"We continue on pace with a program of $25 million in cost reductions and will take additional actions to address the shortfall. At the same time, we continue to support our unique business model to optimize performance as markets rebound."
UPDATED OUTLOOK
Third-quarter 2015 revenue guidance
- Industrial and Mobile
- Shipments to be about 15 percent lower than second-quarter 2015
- Automotive demand to remain strong
- Industrial end markets weakening due to impact from low oil prices; declining mining markets
- Energy and Distribution
- Shipments to drop about 30 percent from the second-quarter 2015
- Weaker oil and gas markets due to low oil prices and associated decrease in energy exploration and production spend
- Lower distribution channel demand across both energy and industrial end markets due to high customer inventory levels
Third-quarter 2015 EBITDA guidance
- Expect EBITDA at a loss of between $30 million and $40 million for the third quarter
- Negative impact from weakness in oil and gas and certain industrial end markets
- Expect 40 percent melt utilization resulting in manufacturing inefficiencies and higher costs
- Improved raw material spread versus second quarter as a result of stabilizing scrap prices
Other guidance
- 2015 capital spending to be between $75 million and $85 million; a reduction from prior guidance of $80 million to $90 million
- Maintaining dividend at current levels subject to board approval
- Evaluating our share repurchase program
ANNOUNCEMENT OF THIRD-QUARTER 2015 FINANCIAL RESULTS
The company will announce third-quarter earnings on Thursday, Oct. 29, 2015 followed by a conference call to discuss the performance at 9 a.m. EDT on Friday, Oct. 30. The financial results and third-quarter 2015 earnings supporting information will be available at that time on our website at investors.timkensteel.com.
About TimkenSteel Corporation
TimkenSteel (NYSE:TMST, timkensteel.com) creates tailored steel products and services for demanding applications, helping customers push the bounds of what's possible within their industries. The company reaches around the world in its customers' products and leads North America in large alloy steel bars (up to 16 inches in diameter) and seamless mechanical tubing made of its special bar quality (SBQ) steel, as well as supply chain and steel services. Operating from five countries, TimkenSteel posted sales of $1.7 billion in 2014 and was named 2015 Steel Producer of the Year by American Metal Market. Follow us on Twitter @TimkenSteel.
This news release includes "forward-looking" statements within the meaning of the federal securities laws. You can generally identify the company's forward-looking statements by words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "outlook," "intend," "may," "plan," "possible," "potential," "predict," "project," "seek," "target," "should" or "would" or other similar words, phrases or expressions that convey the uncertainty of future events or outcomes. The company cautions readers that actual results may differ materially from those expressed or implied in forward-looking statements made by or on behalf of the company due to a variety of factors, such as: the company's ability to realize the expected benefits of its spinoff from The Timken Company; the costs associated with being an independent public company, which may be higher than anticipated; deterioration in world economic conditions, or in economic conditions in any of the geographic regions in which the company conducts business, including additional adverse effects from global economic slowdown, terrorism or hostilities, including political risks associated with the potential instability of governments and legal systems in countries in which the company or its customers conduct business, and changes in currency valuations; the effects of fluctuations in customer demand on sales, product mix and prices in the industries in which the company operates, including the ability of the company to respond to rapid changes in customer demand, the effects of customer bankruptcies or liquidations, the impact of changes in industrial business cycles, and whether conditions of fair trade exist in U.S. markets; competitive factors, including changes in market penetration, increasing price competition by existing or new foreign and domestic competitors, the introduction of new products by existing and new competitors, and new technology that may impact the way the company's products are sold or distributed; changes in operating costs, including the effect of changes in the company's manufacturing processes, changes in costs associated with varying levels of operations and manufacturing capacity, availability of raw materials and energy, the company's ability to mitigate the impact of fluctuations in raw materials and energy costs and the effectiveness of its surcharge mechanism, changes in the expected costs associated with product warranty claims, changes resulting from inventory management, cost reduction initiatives and different levels of customer demands, the effects of unplanned work stoppages, and changes in the cost of labor and benefits; the success of the company's operating plans, announced programs, initiatives and capital investments (including the jumbo bloom vertical caster and advanced quench-and-temper facility), the ability to integrate acquired companies, the ability of acquired companies to achieve satisfactory operating results, including results being accretive to earnings, and the company's ability to maintain appropriate relations with unions that represent its employees in certain locations in order to avoid disruptions of business; and changes in worldwide financial markets, including availability of financing and interest rates, which affect the company's cost of funds and/or ability to raise capital, the company's pension obligations and investment performance, and/or customer demand and the ability of customers to obtain financing to purchase the company's products or equipment that contain its products, and the amount of any dividend declared by the company's board of directors on its common shares.
Additional risks relating to the company's business, the industries in which the company operates or the company's common shares may be described from time to time in the company's filings with the SEC. All of these risk factors are difficult to predict, are subject to material uncertainties that may affect actual results and may be beyond the company's control.
Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered to be a complete list. Except as required by the federal securities laws, the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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SOURCE TimkenSteel
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