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Edited Transcript of TMST earnings conference call or presentation 7-Nov-19 2:00pm GMT

Q3 2019 TimkenSteel Corp Earnings Call

Canton Nov 14, 2019 (Thomson StreetEvents) -- Edited Transcript of TimkenSteel Corp earnings conference call or presentation Thursday, November 7, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jennifer K. Beeman

TimkenSteel Corporation - Senior Manager of Communications & IR

* Kristopher R. Westbrooks

TimkenSteel Corporation - Executive VP & CFO

* Terry L. Dunlap

TimkenSteel Corporation - Interim CEO, President & Director

* Thomas D. Moline

TimkenSteel Corporation - EVP of Commercial Operations

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Conference Call Participants

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* James Brian Kitzinger

KLCM Advisors, Inc. - Principal, Portfolio Manager & President

* Justin Laurence Bergner

Gabelli Funds, LLC - Research Analyst

* Michael David Leshock

KeyBanc Capital Markets Inc., Research Division - Associate

* Philip Ross Gibbs

KeyBanc Capital Markets Inc., Research Division - Director & Equity Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the TimkenSteel Third Quarter 2019 Earnings Call.

(Operator Instructions)

Please note that today's call is being recorded.

I would now like to hand the conference over to your speaker today, Jennifer Beeman. Please go ahead.

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Jennifer K. Beeman, TimkenSteel Corporation - Senior Manager of Communications & IR [2]

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Thank you, Natalie. Good morning and welcome to TimkenSteel's Third Quarter 2019 Conference Call. I'm Jennifer Beeman, Senior Manager of Communications and Investor Relations for TimkenSteel. Joining me today is Terry Dunlap, Interim Chief Executive Officer and President; and Kris Westbrooks, Executive Vice President and Chief Financial Officer. In addition, Bill Bryan, Executive Vice President of Manufacturing and Supply Chain; and Tom Moline, Executive Vice President of Commercial, will also be available for Q&A at the end of this call.

You all should have received a copy of our press release, which was issued last night. Additionally, we have provided supplemental slides, which are available on our website.

During today's conference call, we may make forward-looking statements as defined by the SEC. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in yesterday's release. Please refer to our SEC filings, including our most recent Form 10-K and Form 10-Q and the list of factors included in our earnings release, all of which are available on the TimkenSteel website.

When non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are also included in the earnings release and supporting information as appropriate.

With that, I'd like to turn the call over to Terry. Terry?

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Terry L. Dunlap, TimkenSteel Corporation - Interim CEO, President & Director [3]

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Thank you, Jennifer, and thank you to everyone on the call for joining us this morning and for your interest in our company.

Before I begin, I'd like to take a moment to thank the employees of TimkenSteel. Over the past month, I have -- the many people I've met are engaged and dedicated, and they've made me feel very welcomed. I've been busy meeting with employees, shareholders and customers as well as visiting our plants and getting to know more about our talented workforce and manufacturing operations. I know I have many more people to meet and much more to learn, but I'm certain the team is committed to implementing the changes needed to improve profitability and overall performance.

Also, a word about safety. Safety is a core value of our company and certainly a core value of mine. It is of critical importance to me and the most important priority for all of our 3,000 employees. This safety-first mindset has been a cornerstone in maintaining the overall health and safety of our employees, and our team continues to implement actions that reduce risk, incidents and injuries on a daily basis.

This year, our health and safety team introduced the Iron Shield award. The team at our Faircrest, Ohio plant won for their suggested improvements related to saw blade safety at our rolling mill. I congratulate the Faircrest team, and please keep up the good work. With our ongoing journey towards 0 injuries, I'm impressed by the motivation and creativity of our teams to find solutions to keep everyone safe every day, every shift.

Moving on to the third quarter. We continue to be challenged by demand in many of our end markets. While EBITDA was at the high end of our guidance range after adjusting for the higher-than-expected LIFO benefit, we continued to feel the impact of lower volumes.

Third quarter shipments decreased 29% year-over-year as we experienced lower shipments in nearly all of our end markets. Sequentially, shipments declined 16% primarily driven by lower mobile and energy demand. The sequential decline was caused, in part, by the GM strike, seasonal customer shutdowns, as well as continued high inventory levels and distribution. In the energy sector, we continued to be impacted by the decline in oil rig count and drilling activity. Rig count has declined 20% throughout 2019 with further decreases expected as we head into the end of the year.

From a cash flow perspective, we had a strong quarter, generating $33 million of free cash flow. We worked to reduce inventories and better align working capital requirements with market demand. Equally important, we improved our liquidity position by refinancing our credit facility, and we paid down an additional $35 million of debt in the third quarter. Kris will cover more detail shortly.

Moving to scrap and other raw materials. I realize there has been significant industry commentary speculating that scrap pricing has bottomed. From our perspective, we see further modest declines into November but anticipate scrap pricing will improve in coming months.

Let me take a moment to update you on the company's profitability improvement plan, which was launched in early 2019 and is beginning to bear fruit. Initial actions focused on taking steps to simplifying TimkenSteel's business operating model: for example, in October, we eliminated a number of senior management layers to help drive profitability and create greater organizational alignment. This action is expected to generate $3.5 million of savings in 2020 and are included in the previously stated target of $60 million on an annualized basis, of which $35 million will be realized in 2019. Although we have begun the journey toward becoming a more profitable company, we understand there is significant work to be done in the months ahead. While these actions are never easy, the streamlining of business processes and increased efficiency will provide significant benefits going forward.

While there's a lot of activity going on internally at TimkenSteel, I'm also spending time with customers to learn what's on their minds and how we can even -- work even better together. We must focus on listening to our customers and placing our utmost attention on the actions required to be a valuable business partner. Customers are the lifeblood of our business, and we will continue to listen, learn and act to meet and exceed their expectations for quality, service and ease of doing business.

I'm also pleased that we recently received 2 customer awards for quality excellence. Nexteer Automotive, the leading -- a leading supplier to the automotive market, has recognized us with a Perfect Quality Award. Nexteer annually recognizes suppliers who set the standard for exceptional quality performance, and we're proud to be a long-standing partner with them. In addition, we have received the Caterpillar Supplier Quality Excellence Process award at the Gold level. Through demonstrated process controls and a commitment to continuous improvement, TimkenSteel was able to earn Caterpillar's recognition with this key quality system supplier certification. I congratulate our team on these honors.

Recognition is important and appreciated, but we are operating in a challenging and competitive market, so we must do more to win our customers' trust, confidence and, ultimately, their business.

Now Kris will walk you through the numbers, and then we'll take your questions. Kris?

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Kristopher R. Westbrooks, TimkenSteel Corporation - Executive VP & CFO [4]

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Thanks, Terry, and good morning, everyone. As Terry discussed, we continue to face challenging market conditions. To help mitigate these challenges and better prepare for the future, we're acting with the utmost urgency and have made significant strides by increasing our liquidity position, advancing our profitability improvement plan and positioning our business for sustainability and growth.

On a GAAP basis, the third quarter of 2019 net loss was $4.6 million or a loss of $0.10 per diluted share compared with net income of $1.4 million or $0.03 per diluted share in the third quarter last year. EBITDA was $14.4 million in the third quarter of 2019, above our previously communicated guidance range of negative $5 million to positive $5 million.

LIFO was a significant benefit of $16 million in the third quarter of 2019, which was higher than our previously guided $6 million estimated benefit. The LIFO benefit was driven primarily by declining raw material scrap prices. Excluding the higher-than-anticipated LIFO benefit, third quarter EBITDA was at the high end of our guidance range. Price and mix benefited by $9 million compared to the third quarter last year from the continuing impact of prior year spot price increases in 2019 contract pricing as well as lower shipments of OCTG billets. This price/mix benefit was more than offset by lower shipments across our end markets in comparison to the prior year third quarter, as Terry discussed.

Surcharge revenue decreased $56 million in the prior year quarter as a result of the declining No. 1 busheling scrap index and lower volume. From a manufacturing perspective, our melt utilization of 43% during the third quarter of 2019 resulted in unfavorable fixed cost leverage and reflects the continued balancing of production with the demand environment. This compares to melt utilization of 57% in the second quarter of 2019.

Additionally, within manufacturing, we reduced our hourly workforce by approximately 250 employees since the end of 2018. This difficult but required action, combined with careful management of expenses such as maintenance and consumables, enabled the company to flex its variable manufacturing costs downward with demand.

SG&A expense for the third quarter of 2019 was $21 million, approximately $1 million less than the third quarter of 2018 after adjusting for the executive severance costs recognized in the prior year third quarter. This lower SG&A was primarily due to a reduction in compensation expense as a result of the previous restructuring actions.

Turning now to our profitability improvement plan that launched in early 2019. We've been aggressively implementing cost-savings initiatives throughout the year, including the recent further simplification of our organizational structure. During the third quarter of 2019, the company realized approximately $12 million of benefits with approximately $22 million realized through the end of September. As Terry mentioned, the additional restructuring actions taken in October will contribute approximately $3.5 million of annualized savings beginning in 2020 with a cash cost of approximately $1.5 million to $2 million. The company remains on track to realize approximately $35 million of savings this year and approximately $60 million of savings on a run rate basis in 2020.

Moving on. Capital expenditures were $9 million in the third quarter of 2019. We estimate our fourth quarter of 2019 CapEx to be in the range of $15 million to $20 million, resulting in a full year CapEx estimate of approximately $40 million. As discussed last quarter, we're expanding our St. Clair facility in Eaton, Ohio to support customer commitments for automotive powertrain component programs. The facility expansion remains on track to be completed in the first half of 2020 with approximately $6 million of capital spending this year in 2019 and $5 million planned in 2020 as the project is completed.

Turning now to sources of cash and liquidity. Our total available liquidity was $205 million as of September 30, 2019, an improvement of $32 million since the end of the prior quarter. During the third quarter, the company generated positive free cash flow of $33 million, which was utilized to pay down $35 million of debt. The positive free cash flow generation was aided by focused efforts to reduce inventory levels as we aligned production with demand.

On October 15, 2019, we completed the refinancing of our asset-based revolving credit facility or ABL. We're pleased with the improved financial terms and additional liquidity provided by the new facility and appreciate the confidence and support provided by our bank group. The amended ABL fully leverages our accounts receivable, inventory and machinery and equipment asset base through an increase in the ABL borrowing capacity of $100 million, bringing the total ABL capacity to $400 million. From an interest cost perspective, we reduced the interest rate to be paid on ABL borrowings by 50 basis points and reduced the unused commitment fee to a flat 25 basis points from a range of 37.5 to 50 basis points in the previous agreement. These amendments to the credit facility are estimated to save approximately $1 million per year of cash interest at historical borrowing levels. The new facility includes an accordion expansion feature of $100 million available for future liquidity needs should our asset base support it, and it extends the maturity date to October 15, 2024.

Our convertible debt with a principal amount of $86 million matures in June of 2021. We continue to monitor the capital markets and believe options exist to address the convertible debt opportunistically in advance of or at its maturity date.

Now turning to our fourth quarter outlook. We expect shipments to be approximately 15% lower than the third quarter of 2019. Continued end market weakness in energy and industrial, customer inventory management and typical year-end seasonality are all contributing factors. Raw material surcharges are expected to be lower due to a declining No. 1 busheling scrap index. LIFO is projected to continue to be a benefit but at a lower level than the third quarter of 2019.

As a result, we're forecasting adjusted EBITDA in the fourth quarter to be in the range of breakeven to negative $10 million. The adjusted EBITDA guidance range excludes the impact of any gain or loss from the year-end remeasurements of our benefit plan assets and liabilities that cannot be estimated at this time as well as costs associated with our CEO transition and recent restructuring action discussed earlier.

Natalie, this wraps up our prepared remarks, and we'd like to now open up the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

And our first question will come from the line of Justin Bergner of G. Research.

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Justin Laurence Bergner, Gabelli Funds, LLC - Research Analyst [2]

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I had a few questions. I guess just to start, is it possible for you to quantify the effect of the GM strike on your automotive volumes in the third quarter and sort of expected in the fourth quarter? And how much of that sort of will you get back versus sort of losing for good?

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Kristopher R. Westbrooks, TimkenSteel Corporation - Executive VP & CFO [3]

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Sure, Justin. Without giving specifics, it was a smaller impact in Q3 but still meaningful. Q4, in November -- we do expect to see, in October, a continuing -- a larger impact. We factored it into our guidance range, so it's driving part of that unfavorability but definitely more meaningful in the fourth quarter to the tune of 3x to 4x the size of what it was in the third quarter.

In terms of quantifying it or in terms of the impact, will it come back or not? I don't know, Tom, do you have any thoughts on that?

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Thomas D. Moline, TimkenSteel Corporation - EVP of Commercial Operations [4]

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Unfortunately, yes, as Kris said, and again, this is Tom Moline, the strike impact for us for the quarter was marginal. But we will most certainly see additional impacts in Q4 as the total pull-through of the entire supply chain becomes clearer. At the present, that is very unclear. The certainty around how much inventory was built up through the entirety of that supply chain is being sorted out right now, and we are just reacting to signals that we're getting through from customers through that entire supply chain and in the coming weeks, I think we'll have a much better understanding of how much gain or get-back they will realize on that production loss and the impacts it'll have on our schedules.

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Justin Laurence Bergner, Gabelli Funds, LLC - Research Analyst [5]

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I know you talked about the fourth quarter being 3x to 4x the third quarter. Did you ever quantify what the impact in the third quarter was? Or is it expected to be to sort of try and size up what the fourth quarter might be? Or do you want to just keep it a little bit more opaque at present?

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Kristopher R. Westbrooks, TimkenSteel Corporation - Executive VP & CFO [6]

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Yes. Let's keep it more opaque. But it's a meaningful impact in Q4, still working through. Like Tom said, it's just a little challenging now to give the specifics on that. But Q3 was smaller but definitely a bigger impact in Q4.

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Justin Laurence Bergner, Gabelli Funds, LLC - Research Analyst [7]

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Okay. I guess since you're not giving sort of sequential volume guide by end market anymore, maybe if you could talk a bit about the delta between the down 10% expected shipments in Q3 and the down 16%. How that sort of broke down across energy, mobile and industrial? And was the mobile sort of shortfall all related to the GM strike? Or were there other factors at play?

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Kristopher R. Westbrooks, TimkenSteel Corporation - Executive VP & CFO [8]

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We're talking sequential from Q2 to Q3 specific to mobile. Tom, do you mind talking briefly just what drove that from your perspective?

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Thomas D. Moline, TimkenSteel Corporation - EVP of Commercial Operations [9]

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Yes. The mobile and highway market was down for us in the quarter primarily as a result of planned and some unplanned maintenance outages amongst our customers during the quarter and then obviously the supply chain disruption caused by the UAW strike at General Motors.

Now fourth quarter relative to Q3, when you look at our volumes, we will be down again marginally for automotive. And for all intents and purposes, the lion's share of that impact will be as a result of the GM strike disruption.

When you look at the rest of our markets, the biggest impact on our 14% to 15% downward movement on volume Q4 to Q3 will be energy-related, both in direct supply to OEMs as well as materials going through the distribution channel. We will see industrial down a bit as well, but the larger impact will come from energy.

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Justin Laurence Bergner, Gabelli Funds, LLC - Research Analyst [10]

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Okay. That's helpful. Maybe stepping back and looking more big-picture drivers of the business. Terry, I and, I imagine, others have been trying to sort of dig into the primary reasons why the CEO change was made. And I guess I have sort of honed in on this notion that maybe there could have been better efforts undertaken in the last couple of years to try and win new business against challenging end markets. So now that you've been on the job for a little time, maybe if you could just comment on opportunities to win new business in existing or new markets, what opportunities may have been missed or overlooked in the last year or 2. Obviously, your melt utilization is unsustainably low at the present time. So I'd love to hear your thoughts there.

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Terry L. Dunlap, TimkenSteel Corporation - Interim CEO, President & Director [11]

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Great. Yes. Well, first and foremost, the results haven't been good. We all know that. As far as the volume goes and the market goes, right now, as you know in this industry, it's contract time. It's win-business time, and our commercial team is doing everything in their power to be out and about with customers and working through the opportunities for 2020. That all takes place between now and more or less the end of the year, if you will, on the things that we've done well and on the things and places where we haven't done so well. So extremely focused on that initiative as we roll into 2020 in every market.

As for opportunities, Justin, and missed or lost, we're eyes ahead, eyes forward on the things that are in front of us and making sure we're doing the right things for our customers and, as I said in my prepared remarks, being attentive, listening hard and doing all the things we need to do to win the business that -- and keep what we have and win new business. So it's a very, very important focal point for the company right now, I can tell you that.

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Justin Laurence Bergner, Gabelli Funds, LLC - Research Analyst [12]

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Okay. I mean are there any markets you want to highlight that -- or new markets, I guess, you might want to highlight? I know in the prior quarter, there was some discussion about opportunities on the defense side that would be sort of accretive to the company's addressable market. Any update there or other new markets that sort of interests you look forward?

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Terry L. Dunlap, TimkenSteel Corporation - Interim CEO, President & Director [13]

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Well, we're working on all of those markets that we talked about last quarter, including the ones you mentioned. And I think we'll be better positioned to talk to you more about that in February as we get through this contract cycle. But certainly, head down, working on all those things that we talked about last quarter to roll into '20. Tom, anything else you'd like to add?

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Thomas D. Moline, TimkenSteel Corporation - EVP of Commercial Operations [14]

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No. Just 1 specific. Defense submarket within the industrial group is very robust right now, and we have had success recently in winning new programs and getting involved in more of those platforms. The magnitude of those will become clearer in the coming months. But yes, some of the areas that we defined a focus on, we are making gains.

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Operator [15]

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And our next question comes from the line of Phil Gibbs from KeyBanc.

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Philip Ross Gibbs, KeyBanc Capital Markets Inc., Research Division - Director & Equity Research Analyst [16]

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Just a question here on mix versus the third quarter. Should this be, outside of volume changes, should this be the mix that we should expect moving forward? And what are the maintenance expectations for the rest of the year? And what were they in the third quarter?

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Kristopher R. Westbrooks, TimkenSteel Corporation - Executive VP & CFO [17]

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Sure. So Phil, it's Kris. Not seeing a lot of change in mix for Q4, pretty consistent with Q3 right now. From a maintenance perspective, in the third quarter, we spent about $4 million on our annual shutdown. So it came in lighter than the guide that we talked about, the $6 million last quarter. Not expecting a whole lot to be spent in fourth quarter. Everything's behind us. So if you look all in this year, we spent around $10 million for our annual shutdown compared to around $14 million, $15 million last year. So we're able to manage that down a little bit. Part of that was due to the lower demand in the tear in our, wear and tear on the equipment, but we're very with comfortable the work that we did. And we're well positioned with good working machines here ready to go into 2020.

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Philip Ross Gibbs, KeyBanc Capital Markets Inc., Research Division - Director & Equity Research Analyst [18]

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Okay. I appreciate that. And I know you didn't want to give any comments in terms of what the remeasurement could be. But just generically on the pension, if we were to reset it today, because I know lots of companies have different plans and different types of accounting methodologies, generically, what should we expect to see on the net liability of the expense and the contributions?

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Kristopher R. Westbrooks, TimkenSteel Corporation - Executive VP & CFO [19]

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Yes. It's really hard to say even directionally right now. All I can say is it's been a good asset return year. So that will help us as we go into 2020. Discount rates are down as well. So we'll see how that all shakes out as we do all the work as we end the year here.

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Philip Ross Gibbs, KeyBanc Capital Markets Inc., Research Division - Director & Equity Research Analyst [20]

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And then just on -- for Terry. I know that company's obviously struggled with execution. That's been pretty well documented the last several quarters. I mean what really [in and above] your plans for cost execution on this existing plan do you have out there? And is there a consideration of having just a broader canvassing to perhaps become acquired?

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Terry L. Dunlap, TimkenSteel Corporation - Interim CEO, President & Director [21]

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Well, what I can say, Phil, is since the end of the third quarter, we've identified several opportunities to drive systemic improvements to our profitability and cash flow in the very near term, which will position us into the future. We'll share those details with you as we finalize the plans and as we're implementing plans. But the list is long: cost reductions, cash generations, operational efficiencies, et cetera, et cetera. And we'll be hearing -- you'll be hearing more about those in the weeks ahead as we finalize and begin to implement.

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Operator [22]

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(Operator Instructions)

Our next question comes from the line of Justin Bergner of G. Research.

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Justin Laurence Bergner, Gabelli Funds, LLC - Research Analyst [23]

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Just want to ask a quick question about the credit facility and the renewed ABL. Was there anything that TimkenSteel needs to sort of give up and return to get this extended borrowing limit and lower interest rate on both used and unused balances?

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Kristopher R. Westbrooks, TimkenSteel Corporation - Executive VP & CFO [24]

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No. Not at all. We came out very strong from the refinance with even a more favorable facility for us. Part of that's market conditions. Part of that's how we maintain our assets and the strong asset base that supports the facility. So we came out -- there were no provisions in the entire agreement that came through less favorable than the prior agreement.

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Justin Laurence Bergner, Gabelli Funds, LLC - Research Analyst [25]

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Okay. Great. And then just 1 more market-based question. As you look at the energy market, obviously, it's in the doldrums. Do you see any potential for that market to turn? Or do you feel that shipments right now are just running materially below end market demand due to inventory shifts? I mean should we expect a balance in the coming quarters just because we're underproducing the market? Or what type of visibility do you have, if any, there?

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Terry L. Dunlap, TimkenSteel Corporation - Interim CEO, President & Director [26]

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Well, the energy market in a word is just "weak." Some of this has already been mentioned, but U.S. rig counts continued to decline throughout the quarter. Most recent rig counts have been the lowest we've seen since early 2018. Oil prices continue to fluctuate between $50 and $60 a barrel, and drilled but uncompleted wells are still at historic high levels, greater than 8,000. So in general, this market is weak and operators are constraining their spending. And the tool and component manufacturers are very focused on reducing their inventory.

And as I said earlier, most service centers that service the oil and gas industry still have far too much inventory to support demand. Inventory positions vary, but all report intense competition for orders within their customer base. And really, any talk of offshore drilling activity continues to be pushed out into the distant future. But for my opinion, the tool and the component manufacturers, which is a heavy focus for us, they'll start coming back into the market as more of the already-drilled wells get completed.

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Operator [27]

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And our next question comes from the line of Michael Leshock of KeyBanc Capital.

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Michael David Leshock, KeyBanc Capital Markets Inc., Research Division - Associate [28]

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So just want to touch on auto contracts as negotiations are ongoing there. What are your expectations for 2020 contract pricing? Or any other color you can provide there?

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Terry L. Dunlap, TimkenSteel Corporation - Interim CEO, President & Director [29]

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Well, first, we don't talk about specific contracts, Michael, as I know you can appreciate. Tom, do you want to just talk a little bit about where things are in general?

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Thomas D. Moline, TimkenSteel Corporation - EVP of Commercial Operations [30]

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Yes. I mean we're in the middle of those contract talks right now. Obviously, there are some price pressures out there in this kind of a market environment. But we are probably 4 to 6 weeks away from really understanding the direction that, that's going to go. I will throw 1 other positive note in here on the mobile market, in that every major mobile OEM and most of the tier 1s are investing in the electrification of vehicles. And some of these programs will launch as early as next year, but most will begin launching in 2021 and 2022. And our Value-added Components Group is very focused on this technology shift, which involves new applications for us. And we have recently been awarded several new battery electric vehicle components for future platforms. So while we're in the middle of all these negotiations, we're also working on new programs and new platforms. And we are very well positioned to service this market, particularly in the applications that we cover.

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Michael David Leshock, KeyBanc Capital Markets Inc., Research Division - Associate [31]

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Okay. Great. And then how should we think about net working capital expectations in 2020?

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Kristopher R. Westbrooks, TimkenSteel Corporation - Executive VP & CFO [32]

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Yes. It's still a little early for us. We are very, very focused, though, on improving our processes and continuing to generate positive working capital. It'll be a focus in Q4 and going into next year, but we'll have to provide more guidance on that as we get into the beginning of the year.

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Operator [33]

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And our next question comes from the line of Jim Kitzinger of KLCM Advisors.

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James Brian Kitzinger, KLCM Advisors, Inc. - Principal, Portfolio Manager & President [34]

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I'd like to touch on some more strategic issues. Terry, as I read the press release from a little bit ago, you were named Interim CEO. Can you help me understand what that means, whether or not you're looking for a long-term CEO? And also, I'm interested in other strategic options the Board is or is not considering. And those questions really revolve around the ability to have sustainable returns in the business model that Timken finds itself at this point in time, and whether or not -- even if you have sustained returns or sustainable returns, the public market will reward you for your efforts. So if you could flesh out some of that, it would be very helpful.

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Terry L. Dunlap, TimkenSteel Corporation - Interim CEO, President & Director [35]

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Great. Thanks for the questions, Jim. Regarding the CEO job, the Board has not begun a formal search for my replacement. So I'm in here -- I'm here in Canton every day, full-time, giving TimkenSteel my very full attention. And I can tell you, we're very focused on doing the work at hand here every day. So that's for the foreseeable future. And if there's a change in that direction, we'll certainly let all of you know as soon as that happens. But for the moment, I'm here every day working very hard at the work that needs to be done here.

Secondly, on the strategic options, as I said a few minutes ago, what I can say is we all recognize that the performance of the company has been unacceptable. And at the end of the day, we have to take every step possible to make sure we're creating value for shareholders. So we've been here 3 or 4 weeks, and we're working hard at everything possible, as I mentioned a few minutes ago to a prior question. And as we have details around those things, we're going to be talking to all of you. You'll be the first to know as we're rolling them out. So bottom line is we understand the results to our shareholders has been completely unacceptable, and we understand it's our first priority to change that.

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James Brian Kitzinger, KLCM Advisors, Inc. - Principal, Portfolio Manager & President [36]

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A little follow-up there, Terry. I understand that. And to me, those are tactical issues of fixing the business, which should happen regardless of strategic issues. My question really is, has the Board contemplated at least strategic issues as this process -- my sense is there, you can do more than just the tactical fix the business. You could go down 2 paths, and I want to understand if the Board is open-minded to all options to improve the value for shareholders.

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Terry L. Dunlap, TimkenSteel Corporation - Interim CEO, President & Director [37]

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We believe there's a lot of opportunity, Jim. And we are focused on those opportunities. And that's all I can say about it at the moment. But we are focused on every opportunity.

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Jennifer K. Beeman, TimkenSteel Corporation - Senior Manager of Communications & IR [38]

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Operator, if there are no further questions, we'll turn the call back over to Terry.

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Terry L. Dunlap, TimkenSteel Corporation - Interim CEO, President & Director [39]

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Thank you, Jennifer. We truly appreciate your interest in TimkenSteel and your patience during this period of change. I can tell you we're laser-focused on driving financial and structural improvements to the business that will benefit our customers and our shareholders. Thank you to our customers. The entire TimkenSteel team will work tirelessly to earn your trust and win your business. And finally, my thanks to our employees for their hard work and most importantly for working safely. I look forward to updating you on our progress next quarter.

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Jennifer K. Beeman, TimkenSteel Corporation - Senior Manager of Communications & IR [40]

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Thank you, and that concludes our call today.

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Operator [41]

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Thank you to all our participants for joining us. You may now disconnect. Have a great day.