TimkenSteel today reported first-quarter 2019 net sales of $371 million and net income of $4.2 million. In the same quarter last year, net sales were $381 million with a net loss of $1.9 million.
First-quarter net sales decreased $10 million or 3 percent year over year. Ship tons were 260,900, a decrease of 13 percent from first-quarter 2018. In a statement, the company said the decrease was in line with prior guidance and primarily due to lower oil country tubular goods (OCTG) billet shipments.
The company said net sales benefited from “improvements in product mix and price, driven by improved 2019 contract pricing, prior-year spot price increases and a continued focus on the sale of higher-margin products.”
Net income was $4.2 million, an increase of $6.1 million from first-quarter 2018. The company said improvements in contract pricing and the benefit of prior-year spot pricing, combined with lower OCTG billet volume, resulted in a $22 million improvement in product mix and price.
The company said manufacturing costs reflected lower fixed-cost leverage of $9 million due to first-quarter 2019 planned production downtime to balance inventory with near-term demand, adding that “raw material spread was an $11 million headwind due to the decline of the No.1 busheling scrap index and lower volumes compared with first-quarter 2018.”
As for a Q2 outlook, the company said shipments are expected to be similar to first-quarter 2019 on 12 percent lower production.
“Lower second-quarter demand and production provides the opportunity to accelerate certain scheduled maintenance into the second quarter from third-quarter 2019,” the company said. “As a result of this timing change, second-quarter fixed-cost leverage will be lower by approximately $10 million and second-quarter maintenance will increase by approximately $7 million, with an offsetting benefit in third-quarter 2019.”