TimkenSteel (TMST) Earnings Top Estimates in Q2, Revenues Miss
TimkenSteel Corporation TMST recorded a profit of $28.9 million or 62 cents per share in second-quarter 2023, down from a profit of $74.5 million or $1.42 in the year-ago quarter.
Barring one-time items, adjusted earnings were 60 cents for the quarter, beating the Zacks Consensus Estimate of 57 cents.
Sales fell around 14% year over year to $356.6 million in the quarter. The figure missed the Zacks Consensus Estimate of $357.5 million. The top line was hurt by reduced shipments and lower surcharge revenue per ton as a result of lower scrap prices. This was partly offset by higher base sales prices.
Timken Steel Corporation Price, Consensus and EPS Surprise
Timken Steel Corporation price-consensus-eps-surprise-chart | Timken Steel Corporation Quote
Operating Figures
Ship tons fell 15% year over year to 177,500 in the quarter. The downside was driven by reduced shipments in all markets.
Manufacturing costs increased year over year due to lower cost absorption, inflationary cost pressure as well as higher maintenance costs.
End-Market Highlights
Net sales in Industrial fell around 19% year over year to $168.8 million in the reported quarter. It was above the consensus estimate of $156 million.
Net sales in Mobile declined around 10% year over year to $136.9 million. It was below the consensus estimate of $145 million.
Net sales in Energy declined around 0.9% year over year to $45.9 million. It was below the consensus estimate of $46.8 million.
Financials
At the end of the quarter, the company had cash and cash equivalents of $221.9 million, down around 7% year over year.
The company generated $13.3 million in operating cash flow in the quarter, down 74% year over year.
Outlook
Moving ahead, TimkenSteel anticipates adjusted EBITDA to remain strong in the third quarter of 2023. It sees ship tons to increase modestly in the third quarter. The company also expects steady customer demand and order booking into the fourth quarter.
The company also expects capital expenditures to be around $50 million in 2023.
Price Performance
Shares of TimkenSteel are up 24.7% in the past year compared with the 32.5% rise of the industry.
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Zacks Rank & Other Key Picks
TimkenSteel currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation CRS, PPG Industries, Inc. PPG and Universal Stainless & Alloy Products, Inc. USAP.
The Zacks Consensus Estimate for current fiscal-year earnings for CRS is currently pegged at $3.43, implying year-over-year growth of 200.9%. Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 10%, on average. The stock has rallied around 57% in a year.
PPG Industries currently carries a Zacks Rank #1. The Zacks Consensus Estimate for PPG's current-year earnings has been revised 3.6% upward over the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 7.3%, on average. PPG shares have gained around 5% in a year.
Universal Stainless & Alloy Products currently carrying a Zacks Rank #2. It has a projected earnings growth rate of 160.8% for the current year.
The Zacks Consensus Estimate for USAP's current-year earnings has been revised 181% upward over the past 60 days. USAP shares are up around 74% in a year.
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