Timkensteel ( NYSE: TMST ) shares rose 18% on Friday even as the steel maker swung to quarterly loss of $13.3M from an income of $50.1M in the prior year quarter.
On an adjusted basis, Q3 net loss was $4.1M, or a loss of $0.09 per diluted share, falling short of analysts estimates. Net sales fell 7.8% Y/Y to $316.8M, due to lower shipments and a market-driven 13% reduction in surcharge revenue per ton.
Performance was significantly impacted by the July incident at the firm's melt shop, which resulted in about a month of downtime and a slower than expected ramp up, "significantly" affecting Q3 profitability. As a result of the incident, TimkenSteel ( TMST ) said Q3 melt utilization was 40% compared with 84% in Q2.
Manufacturing costs increased sequentially by $32.8M amid lower melt utilization and higher inflation. Still, operating cash flow was $46.8M with record ending cash and cash equivalents of $262.5M.
Outlook: Despite the lackluster performance, demand remains strong across the company's end markets with a customer order backlog in excess of 300,000 ship tons and the majority of production capacity allocated to customers in 2023. However, the firm expects sequentially lower shipments and surcharge revenue per ton in Q4.
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Timkensteel stock gains even as co swings to loss in Q3