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."
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
- 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.
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