Good morning, my name is Michelle and I will be your conference operator today. At this time I would like to welcome everyone to the TimkenSteel’s Fourth Quarter 2014 Earnings Call. [Operator Instructions.] I would now like to turn the call over to Miss Tina Beskid, please go ahead.

Thank you. Good morning and thanks to all of you for joining TimkenSteel’s fourth quarter 2014 conference call to discuss our financial results. I’m joined by Tim Timken, our Chairman, CEO and President, as well as Chris Holding, Executive Vice President and Chief Financial Officer. During today’s call we may make forward-looking statements as defined by the SEC. These statements relate to our expectations regarding future financial results, plans and business operations, among other matters. Our actual results may differ materially from those projected or implied, due to a variety of factors, which we described in greater detail in today’s press release, supporting information provided in connection with today’s conference call, and in our reports files with the SEC. All of which are available on the www.timkensteel.com website. Our non-GAAP financial information is referenced, we have included reconciliations between such non-GAAP financial information, and its GAAP equivalent in the press release, and or supporting information as appropriate. Today’s call is copyrighted by TimkenSteel Corporation. We prohibit any use, recording, or transmission of any portion of the call without our express, advanced written consent. There will be an opportunity to ask questions at the end of Chris’s prepared remarks. With that I would like to now turn the call over to Tim.

Thanks Tina and thank you all for joining us. 2014 was a great year for TimkenSteel, we performed well both operationally and financially through a disciplined focus on delivering results for our customers and our shareholders. We grew both top line and bottom line results in the fourth quarter, and for the full year. Over the prior-year quarter, sales increased 24% with volume increases in both energy and industrial markets. The full year showed 21% growth. EBIT was up 51% over adjusted 2013. Adjusted earnings per share were up 53%, which generated $2.11 per share. [Audio Gap] 33,000 shares of common stock at an aggregate cost of $31 million. Our team not only maintained a share focus on financial and operational performance, they did it while addressing the additional priorities that came along with an exciting and historic year, our first as an independent company. We set up this new company in an efficient way, building a lean, corporate structure that is comparable to our peers. We completed a five-year investment program in our operations, which culminated in a commissioning of our jumbo bloom vertical caster, the only one of its kind in the world. The caster together with the in-line forge press, that came online in 2013 further strengthens our ability to provide special bar quality steel in large sizes for the most demanding applications. This unique set of assets, solidifies our competitive position, and contributes to more efficient operations. We also embarked on a new phase of our growth strategy, positioning TimkenSteel to bring even greater customer, and shareholder value in years ahead. First we begin to work to add capacity in our most sophisticated and profitable product lines, advanced quench-and-temper heat-treated steels. When the new facility opens in 2016, it will serve a variety of markets and…

Thanks Tim, sales for the fourth quarter were $408 million, increase of $78 million or 24% from 2013. Increased demand from energy, industrial and automotive end markets were the primary drivers of the sales increase. The company shipped 270,000 tons in the quarter which was a 26% increase over 2013. Geographically 97% of sales were to North American customers in both years. Gross profit of $56 million was flat to the fourth quarter of 2013. Gross margin of 13.8% for the quarter was 310 basis points lower than the fourth quarter 2013. Favorable volume and mix were more than offset by raw material spread, LIFO, higher electricity, and separation related costs. For us, raw material spread is the difference between our raw material cost and the No. 1 Busheling Index, which we used to calculate surcharges. The raw material spread is primarily caused by movement in the Busheling Index that creates a timing impact as the price paid for raw materials can differ from the Busheling Index at the time the finished product is shipped. We also buy various types of scrap, not just Busheling, which can contribute to the spread. In the second half of the year the Busheling Index dropped by about 10% which compress the EBIT margins by 270 basis points in the fourth quarter. SG&A $30 million for the quarter which was in line with last years adjusted figure. SG&A was 7.3% of sales, which represented a decrease of 180 basis points from last year. EBIT for the fourth quarter came in at $24 million representing an increase of 6.1% over the same period a year ago. Fourth quarter 2014 EBIT margin was 5.9% compared to 6.9% last year. The effective tax rate for the quarter was 29.8%, the lower quarterly rate was driven by deferred…

[Operator Instructions] The first question comes from Luke Folta from Jefferies. Your line is open.

Hi good morning every one.

Hey Luke.

Okay, so number of questions here. I guess first, just - now we can just pick the focal point at the moment. The pullback we've seen in the oil and gas demand environment, can you give us some sense in terms of magnitude, of which you’re seeing in the order book in that space right now. And I guess just broader context, when we think about the pullback that happened in the - for the second half of ‘12 and more so 2013 timeframe across the business. How would you say, I guess can you sort of compare and contrast what this year looks like and some of the moving parts relative to 2013 timeframe when EBITDA was lower than 160 million bucks?

Well let me talk a little bit about order book and I’ll have Chris to try to wrap some numbers around it for you. Right now, we’re looking at a relatively solid first quarter. I mean the shifting rates in January are good, February looks solid, March, as far as we can see, looks okay. But obviously with rate count coming off, we’re going to begin to feel that here eventually. We’ve really pulled our lead times in, and so that’s affecting our visibility a little bit, but so far through the first quarter, things look okay. I think you can kind of, everybody’s got their own estimate on rate count, Spears is out there with the preload number, and their number of early one’s. But I think, right now, I think it’s all kind of speculation at this point. So compared to ‘12, I’ll let Chris kind of walk you through that, but right now we’ve ridden this cycle before, we know what to do, we’re kind of battening down the hatches looking at accruing those kind of things. So I think we’re doing everything we need at this point. So Chris, you want to take the rest?

Your question is comparing ‘14 to ‘12?

Yeah, 2013 was sort of the bottom end, the last cycle where oil and gas demand pulled back, and some of other markets were weak. And off course pricing has changed a bit since then, you’ve done some investments. So I just wanted to see if you could put in context just how some of these factors come together, and what ‘15 could look like relative to that last downside, down cycle number that we have to sort of compare to?

Yeah right. So the primary thing would be the energy markets would be weaker in 2015 than they would have been in 2012, so that’s big. I think from raw material spread we’ll probably be a little less favorable than they would have been in 2012. And as you saw in our supplemental slides, our pension costs are going to be up, due primarily to the discount rate changed since 2012, and this mortality change. And those would be the three largest items.

Okay, so I guess I was thinking more towards ‘13, because ‘13 was really the trough in earnings?

Yeah, and all three of those would apply to 2013 as well.

Okay, alright. And then when we think about pricing, some of the folks who we spoke to, heading into contract negotiations this year, they gave its indication that contract prices where a lot of the business would be up, somewhere in the neighborhood of 10 to 35, 45 bucks a ton. Can you give us some sense of how the contract negotiations went this year for your annual type business?

Yeah, I would say in general, given market conditions, our negotiations went reasonably well across all of our end markets. With falling scrap, with a number of the other market dynamics, I think we did okay. Our bigger issue is going to be our mix, with the energy side coming off, we’re obviously going to feel the pinch of that. The automotive markets still remain strong, industrial markets for the most part, with a few exceptions like mining and ag, are all feeling pretty good. And so that translated through to a pretty good negotiation season.

Okay. And then on the raw material price spread the terminology is a little bit different than what I’m used to thinking about in that respect, when you discuss that, you’re referring mainly to the difference in - it’s mostly a timing difference between when your inventory costs catch up with the down in moving market prices. Is that the right way to think of it, or is there something embedded in there where scrap prices are lower, you just make less money on that sale?

No you’ve got it right, primarily the issue is around timing. And the biggest issue is when markets are ramping-up, we have a 100 days of inventory and so you get a good guide from that inventory. When the index goes down, then it goes the other way, but once markets stabilize, then that timing impact disappears after the inventory’s burn through.

One other thing that we get a little bit, is a change in index. So remember its index change and how the scrap that we buy, we don’t necessarily line up with the Busheling Index, which we used to surcharge our customers that would be the second half of the equation.

Well - but I imagine maintain that sort of average over time.

Yeah it does.

Okay, and then you know with expectations per scrap to come down in this year, what sort of, how are we thinking about LIFO impact?

By and large you see LIFO offsetting to a very large degree, the scrap spread impact.

The share repurchases you mentioned 2 million shares at least for this year as the minimum, how high would you go sort of on the max, just give us some sense of how to think about it?

Well we had a board approved plan of 3 million shares, we did 833 so far. So we would look to complete that program through ‘15 and depending on market conditions, we’ll come back and look at it, yeah.

Your next question comes from Barry Haynes from [indiscernible]. Your line is open.

A couple of questions. One just with the startup of the bloom vertical caster, I wonder if you could just talk a little bit about how that’s gone so far versus expectations. And just give us a little color for how its running so far?

It’s actually - the ramp’s gone extraordinarily well. We're seeing quality out of this piece of equipment that quite frankly is exceeding our expectation, SERP has finished into your cleanliness, I mean it really is surprising us daily to the positive side, So that’s gone well. The customer certifications were on track and we’ll continue to ramp those through the end of the year, I think we have ramp schedule in the advanced step that we put out that gives you an idea of where we're going to end up for the year. So in general I would say it’s gone extraordinarily well.

Great, terrific. Second question is on energy, as you point out it’s a moving target, but I wonder if you could give us a little bit of color on what you’re hearing from customers so far. And then just a reminder on how much of the exposure is exploration, so it would really move up and down with rig count versus how much, if any, might be production that may tend to be relatively more stable, thanks.

Yeah we're, I mean obviously there’s a lot of uncertainty in the energy markets right now. This thing went, went faster than anybody was, I think, prepared for and went deeper than most people expected. So to a certain extent, people are still kind of catching up and catching their breath. What we're hearing and what we're seeing in our order book, is I said earlier, its people are taking first quarter. And then they’re kind of sitting tight, managing their inventories into the second half. And we’ll see how that shapes out, as I said we pulled our lead times in to try to pick up any business that’s out there. And so we’ll see, we’ll see how it plays out. I’m a little bit more optimistic, I guess, than most. I think we've ridden the oil cycle before we know that when it snaps, it generally snaps back quick. They’re obviously some different market dynamics this time, but this thing might have been a little bit over cooked. So that’s the approach we're taking, we're managing our capital as Chris pointed out, we're managing our spending, where we've got our inventories, we’re getting our inventories where they need to be, to reflect the different marketplace. So I think we're pulling well above right LIBOR’s at this point. I’ll let Chris talk a little bit about the exploration versus the production side.

Yeah I think by and large that most of sales are in the exploration and we probably categorize that as three quarters.

And then my final question is on the share repurchase, have you bought stock in January so far and if so, can you let us know how much, thanks?

Yeah, we did buy shares in January and for rough numbers say 100,000 shares.

Your next question comes from Justin Bergner from Gabelli & Company. Your line is open.

I have a handful of questions, if you want me to get back in the queue at any point just let me know. For starters, I was wondering if you could just help us better understand the mix headwind and maybe noting that there was a mix headwind sort of in the fourth quarter versus the third quarter any color you can provide on sort of the sequential change of energy and distribution shipments within that segment, would be helpful.

Yeah. So what we guided to was through for 2015, we’d look for lower sequential sales in oil and gas. The mix impacts, really gets to be, we have some great positions in the energy market. And we provide products that have quite a bit of value. And so from mix perspective it’s some of those sales come out its unfavorable to our mix. And then sequentially we really didn’t have much of the mix probably from 3Q to the 4Q.

You just say little bit differently, we really haven’t seen the impact of this cycle yet, we didn’t see it in ‘14 and as I said the first part, the January and February of ‘15. Shipments are actually relatively decent, so the impact that you saw was from Q3 to Q4 was kind of normal seasonality, people taking time out of the end of year, so no significant impact at this point from a volume point of view.

So the $10 million sort of sequential decline in the EBIT bridge in the fourth quarter due to volume pricing mix you would describe as normal? Relatively from?

Yes it’s kind of normal seasonality Q3 to Q4, people taking time out around the holidays, we had some manufacturing spending, some cost that we’ve put in, in to the facility so I would say it’s probably close to normal.

Yeah. And it’s very much volume driven.

Two quickies just in terms of financials, the CapEx reduction to $90 to $100 million what’s primarily been delayed or curtailed in that $30 million step down?

We just had some projects on the drawing board that we had announced that we just deferred out to the future. And we had a couple of belt tightening measures.

Just in your memory our average kind of annual maintenance CI kind of spend is in the $50 million to $55 million range so we still have some growth capital in there on the heat-treat side of things as I said we're going to continue to position ourselves to grow over the long-term by spending those kind of dollars.

Yeah. And so specifically if you recall in July we announced our advanced quench and temper facility and we are going forward with that and that’s one of the larger growth items in the capital budget for 2015.

Okay, and on pension, are you finishing the year in relative pension balance noting sort of that you’re in a surplus when you spun-off?

Yeah that’s a great way to categorize it. If you look at the plants that we fund we're very close to 100% funded at year end, we have a unqualified plant that’s unfunded that makes up any difference. So all in, we're call it 98% funded year end.

So that’s post mortality change?

Yeah, that’s post mortality change.

And then just in terms of strategic direction for the company I guess earlier in your remarks Tim, you mentioned inorganic opportunities, speed of interest and then you sort of qualified the area of interest, could you maybe provide little more color there?

Yeah. We - just we've been clear from day one that growth is the priority of the business and that we saw lot of opportunities inorganically in the kind of the value add space. It’s taking that product to that next level of completion. And so the strategy work that we've done since the separation has been focused on identifying those opportunities. Obviously I don’t want to be too clear on where those are, but we have seen a number of opportunities come up, up late that will move the needle for us. So we're kind of in high pursuit at this point.

Is the Daido collaboration a large opportunity, or how should I see that in terms of changing the future trajectory for the company?

We've had a long relationship with Daido from a technical point of view and they’ve obviously helped us from an operational point of view but we also have some commercial agreements where we can take some of their product into parts of Asia that they don’t currently serve. Those are interesting opportunities would I call them huge, no probably not, but I think it’s teaching us about some markets that we haven’t been in the past so we’ll continue to pursue those.

And then my last question because I’ve been on for a while I know, is the two new directors was there any trigger for adding those directors to the board at this particular time?

No we've all said all along that we are targeting nine directors we had seven. And I’d been running the process for the last three, four months to try to identify some specific experience and then in the case of Randall, he brings deep oil and gas knowledge. And given where we are in the oil and gas cycle we probably could have brought him on at a better time. And then Ron, Ron’s got a very good background but very good operational focused, his prior life was [indiscernible] so he knows the numbers, pensions, those kind of issues, so it really was about filling out my skill matrix and nothing other than that.

[Operator Instructions] Your next question comes from Eric Anderson from Western Standards. Your line is open.

Good job in your Energy & Distribution segment revenue in EBIT very well in 2014 it appears that incremental margins over the past few years have been about 30% is it how you guys see them?

Incremental margins yeah in the energy and again depending on kind of the mix and where we are in the cycle, one of the things that happens from a margin perspective is that when markets are going high, in the past we run out of quench and temper capacity and so that’s one of the reasons we in the process of adding more quench and temper capacity because it really is a creative to our margins.

So that helps me understand operating leverage and if you guide it your Energy & Distribution revenue falling sequentially to quarter of those incremental margins are going to become decremental margins of about 30% or is there any cost cutting, like unless in the impact?

Yeah well there’s clearly going to be a decrease in the margin and we are not going to probably at this point call and quantify what those are but to the extent that we have revenues coming out and we will take appropriate cost measures too.

Okay thanks for that color. May be another way to look at it is, obviously the number of drilling rate exasperating in North America is the most important driver for your Energy & Distribution segments, following up on the Jeffries analyst question at the current time drilling rates are I think about $1600 and $1633 which I think is lower than any point in 2013 noting which he was noting. So 2013 Energy & Distribution EBIT was $45 million, is that likely that 2015 energy and distribution EBIT’s lower than that if already below 2015 drilling rates?

It’s tough to make a call on where 2015 is going to come out in terms of the energy markets, clearly it’s a very profitable market to us and to the extend we have revenues to come up it’s going to be detrimental to all of our margins.

So - higher and if oil stays down here at $45 to $50 a barrel will the Energy & Distribution segment generate positive EBIT, I guess may be another way to think about it if 12 months from now you are reporting Q4 2015 results oil $0.50 per barrel with Q4 2015 energy and distribution segment EBIT likely be negative?

This is an interesting question Eric because I think as oil comes back, the question is what’s the new norm going to be and how quickly does it come back so we haven’t been able to make perfect call on how quickly the markets will come back. So it’s probably a question that I don’t want to get too deep into.

I guess the other comment I would add to that is that our distribution also flows through our energy sector as well and right now we are calling industrial distribution it’s being relatively flat. And that obviously is going to help, from a profitability point of view.

Okay great. Couple of days ago New Core addressed few challenges to their business first was the energy industry which obviously which you’ve addressed, the second was high level of imported steel. Can you tell us the historical percentage of imports in your SPQ and seamless categories and if that’s changing with strong U.S. Dollar.

Well traditionally, on the SPQ side, we've seen kind of like about a 20% at any given time, it goes up and goes down a little bit, of the market being served by imports. Obviously with the dollar doing what it’s doing, we're seeing more lap in this current cycle. So we're obviously got it out of Europe, a little bit out of Asia, Korea. So we're seeing pressure, but obviously to the extent that we can drive differentiation in our product mix that gives us a little bit of a buffer, but it’s getting tougher.

How much debt are you willing to take on to ensure you buy back 2 million shares this year?

Well we're willing to do whatever it takes from a share repurchase to get our 2 million shares, we just think it’s a good investment, we've got a strong balance sheet to be able to do it. At this point we're very confident that we’ll execute on this 2 million shares.

I guess when you spun off, one of your key strengths was because you had a much better balance sheet than average steel company. Your yearend net debt was a little higher than I was thinking it would be at about a 151 million, a little higher even than that when you include pension liabilities based on, I think I’m modeling this based on the number that kind of drivers we've discussed, it seems like 2015 EBITDA’s probably at best 150 million. So you can already 1 ton levered, so just kind of caution you made a followed advice - my high school girlfriend - gave me in that take it slow particularly when it comes to the buyback you bought back stock in last quarter by about $10 a share, more than its trading today.

Your high school girlfriend was very wise, I guess.

Not in my eyes, but thanks a lot. Looking forward to next quarter’s results.

At this time I have no further questions in queue. I’d turn the call back over to the presenters for closing remarks.

Well thank you for joining us and for all the good questions. 2014 was an exciting and very successful year for TimkenSteel Corporation. We believe our business model and our people and the assets that support us, make us a leader in the industry. This year is a clear proof point of that. In fact we’ve also had a long track record of succeeding in both up and down markets. Our long experience in the steel industry has well prepared us to continue to drive customer and shareholder value. I want to thank all of you, our shareholders for your continued support of the company. If you have any follow-up questions, please don’t hesitate to contact Tina. So with that we’ll sign off. Thank you.

Thank you everyone. This concludes today’s conference call. You may now disconnect.