TimkenSteel sold its scrap processing facility in Akron, Ohio, during the first quarter of 2020, after recording a $401.8-million year-on-year decline in sales in 2019, the company said in its earnings report on Thursday February 20.
A TimkenSteel spokesperson confirmed to Fastmarkets via email on Friday February 21 that Akron-based Holub Recycling purchased the facility.
TimkenSteel sold the scrap processing facility "for cash consideration of approximately $4 million following a non-cash write-down of $7 million in the fourth quarter of 2019," the Canton, Ohio-based company said. "Proceeds from the sale were utilized to pay down debt."
The move is one prong of TimkenSteel's four-part profitability plan that resulted in realized savings of $40 million during 2019, with expected annualized savings of $70 million moving forward, the steelmaker said.
Other aspects of this plan include the previously announced closure of its Houston material services facility, a 14% reduction of salaried work force, and freezing the benefit accruals on all remaining salaried pension and post-retirement plans. Total annualized savings as a result of those actions were $8 million, $18 million, and $2 million respectively, the company said.
"We continue to take significant steps to improve the company's cost structure and manage working capital efficiency while we simplify the organization, focus on serving our customers and improve safety across the company," TimkenSteel interim chief executive officer and president Terry L. Dunlap said in a statement.
As for actual fourth quarter results, TimkenSteel reported declining net sales and shipment figures amid continued challenging conditions in the domestic special bar quality (SBQ) market.
Fastmarkets’ assessed steel bar hot-rolled special bar quality (SBQ) 1-inch round 1000 series (carbon), fob mill US at $34.50 per hundredweight ($690 per short ton) on February 14, down 18.8% from $42.50 per cwt at this time last year.
Notable takeaways from the company’s fourth quarter include net sales of $226.9 million, a 44.2% decrease from the same period last year; shipments totaling 179,700 tons, a 39% decline from the prior-year period; and a $69-million decline in surcharge revenue from the prior-year period, mainly as a result of weak No1 busheling scrap prices in 2019.
Fastmarkets' steel scrap No1 busheling, index, delivered Midwest mill, fell to $287.17 per gross ton this month. The index stood at $266.15 per gross ton in December 2019, compared with $372.11 per gross ton in January 2019.
“For the full year 2019, net sales were $1.2 billion with a net loss of $110 million,” the company said. “In comparison, full-year 2018 net sales were $1.6 billion with a net loss of $10 million.”
Shipments decreased by 25% year on year to 898,300 tons in 2019, which the company attributed to weak demand from the energy and industrial end markets, as well as lower shipments of oil country tubular goods (OCTG) billets.
"Most of the markets that we are participating in are forecasted to be flat to slightly weak," executive vice president of commercial operations Tom Moline told analysts during the company's earnings call on Friday. "But we seem to be gaining share in all markets to offset that market weakness."
In terms of growth areas, Moline said TimkenSteel will be focusing on the automotive and defense sectors.
"We've talked a little bit about putting more focus on [electric battery] vehicles and hybrid vehicles, which historically has not been an area where we've put a lot of attention. But with the shift to that technology, we're moving very quickly to get engaged with those programs as they begin to launch in 2021, 2022 and 2023," he said.
Moline said activity within the defense segment was "robust," calling it one of the stronger industrial markets that has piqued the company's interest.
"Our focus is absolutely in [defense] as well a number of different applications from missiles, missile bodies, fuse components, large bombs, general munitions and projectiles - not just in the supply of SBQ products and seamless mechanical tube products, but venturing further down the supply chain for those types of applications as well," Moline said.