Timken Reports Second-Quarter 2024 Results
The Timken Company (NYSE: TKR) reported second-quarter 2024 results with sales of $1.18 billion, down 7.1% from last year's record level. Earnings per share were $1.36, with adjusted EPS of $1.63. The company's net income margin was 8.1%, while adjusted EBITDA margin stood at 19.5%. Timken updated its full-year 2024 outlook, now expecting EPS of $5.00-$5.20 and adjusted EPS of $6.00-$6.20. Revenue is forecasted to be down 3-4% from 2023. The company completed the sale of a portion of its stake in Timken India , generating pre-tax proceeds of approximately $232 million. Timken continues to focus on operational excellence, targeted growth initiatives, and strategy execution to deliver resilient performance in 2024.
La Timken Company (NYSE: TKR) ha riportato i risultati del secondo trimestre 2024 con vendite di 1,18 miliardi di dollari, in calo del 7,1% rispetto al livello record dell'anno scorso. Gli utili per azione sono stati di 1,36 dollari, con un EPS rettificato di 1,63 dollari. Il margine di reddito netto dell'azienda era dell'8,1%, mentre il margine EBITDA rettificato ha raggiunto il 19,5%. Timken ha aggiornato le prospettive per l'intero anno 2024, ora aspettandosi un EPS tra 5,00 e 5,20 dollari e un EPS rettificato tra 6,00 e 6,20 dollari. Si prevede che il fatturato diminuisca del 3-4% rispetto al 2023. L'azienda ha completato la vendita di parte della sua partecipazione in Timken India, generando ricavi al lordo delle tasse di circa 232 milioni di dollari. Timken continua a concentrarsi sull'eccellenza operativa, su iniziative di crescita mirate e sull'esecuzione della strategia per garantire una performance resiliente nel 2024.
La Timken Company (NYSE: TKR) reportó los resultados del segundo trimestre de 2024 con ventas de 1,18 mil millones de dólares, una disminución del 7,1% en comparación con el nivel récord del año pasado. Las ganancias por acción fueron de 1,36 dólares, con un EPS ajustado de 1,63 dólares. El margen de ingreso neto de la compañía fue del 8,1%, mientras que el margen EBITDA ajustado fue del 19,5%. Timken actualizó su perspectiva para todo el año 2024, ahora esperando un EPS de entre 5,00 y 5,20 dólares y un EPS ajustado de entre 6,00 y 6,20 dólares. Se pronostica que los ingresos disminuirán entre un 3 y un 4% en comparación con 2023. La empresa completó la venta de una parte de su participación en Timken India, generando ingresos antes de impuestos de aproximadamente 232 millones de dólares. Timken continúa enfocándose en la excelencia operativa, iniciativas de crecimiento dirigidas y la ejecución de estrategias para ofrecer un rendimiento resistente en 2024.
팀켄 컴퍼니 (NYSE: TKR)는 2024년 2분기 실적을 보고하며 매출이 11억 8천만 달러로 작년 기록 대비 7.1% 감소했다고 발표했습니다. 주당 순이익은 1.36달러, 조정된 EPS는 1.63달러였습니다. 회사의 순익률은 8.1%였고, 조정된 EBITDA 마진은 19.5%에 달했습니다. 팀켄은 2024년 전체 연도 전망을 업데이트하며, 이제 EPS를 5.00~5.20달러, 조정된 EPS를 6.00~6.20달러로 예상하고 있습니다. 매출은 2023년 대비 3-4% 감소할 것으로 예상됩니다. 회사는 팀켄 인디아의 일부 지분 판매를 완료하여 세전 약 2억 3천 2백만 달러의 수익을 창출했습니다. 팀켄은 2024년에도 안정적인 실적을 제공하기 위해 운영 우수성, 목표 성장 이니셔티브 및 전략 실행에 집중하고 있습니다.
La Timken Company (NYSE: TKR) a rapporté ses résultats du deuxième trimestre 2024 avec des ventes s'élevant à 1,18 milliard de dollars, en baisse de 7,1% par rapport au niveau record de l'année dernière. Le bénéfice par action était de 1,36 dollar, avec un BPA ajusté de 1,63 dollar. La marge de revenu net de l'entreprise était de 8,1%, tandis que la marge EBITDA ajustée était de 19,5%. Timken a mis à jour ses prévisions pour l'année entière 2024, maintenant anticipant un BPA de 5,00 à 5,20 dollars et un BPA ajusté de 6,00 à 6,20 dollars. Les revenus devraient diminuer de 3 à 4% par rapport à 2023. L'entreprise a complété la vente d'une partie de sa participation dans Timken India, générant des recettes avant impôts d'environ 232 millions de dollars. Timken continue de se concentrer sur l'excellence opérationnelle, des initiatives de croissance ciblées et l'exécution de la stratégie pour offrir des performances résilientes en 2024.
Die Timken Company (NYSE: TKR) berichtete über die Ergebnisse des zweiten Quartals 2024 mit einem Umsatz von 1,18 Milliarden Dollar, was einem Rückgang von 7,1% im Vergleich zum Rekordniveau des Vorjahres entspricht. Earnings per Share betrugen 1,36 Dollar, während das bereinigte EPS bei 1,63 Dollar lag. Die Nettoeinnahmermarge des Unternehmens lag bei 8,1%, während die bereinigte EBITDA-Marge 19,5% betrug. Timken hat sein Ausblick für das Gesamtjahr 2024 aktualisiert und erwartet nun ein EPS von 5,00 bis 5,20 Dollar und ein bereinigtes EPS von 6,00 bis 6,20 Dollar. Der Umsatz wird voraussichtlich um 3-4% im Vergleich zu 2023 zurückgehen. Das Unternehmen hat den Verkauf eines Teils seiner Anteile an Timken Indien abgeschlossen und dabei vor Steuern etwa 232 Millionen Dollar eingenommen. Timken konzentriert sich weiterhin auf operative Exzellenz, gezielte Wachstumsinitiativen und die Umsetzung von Strategien, um 2024 ein robustes Ergebnis zu erzielen.
- Solid second-quarter results in line with company expectations
- Strong margins in both segments, including excellent performance from recent acquisitions
- Increased quarterly dividend by 3%
- Generated significant proceeds from partial sale of Timken India stake
- Net debt-to-adjusted EBITDA ratio at 1.9 times, with no significant debt maturities until 2027
- Sales down 7.1% from last year's record level
- Net income decreased to $96.2 million from $125.2 million in Q2 2023
- Adjusted EBITDA margin declined to 19.5% from 20.7% in Q2 2023
- Lowered full-year 2024 outlook, now expecting revenue to be down 3-4% from 2023
- Significantly lower renewable energy demand in China impacting sales
Insights
Timken's Q2 2024 results reveal a mixed financial picture. Sales of
The adjusted EPS of
The company's strategic move to sell a portion of its stake in Timken India , generating pre-tax proceeds of approximately
The updated full-year 2024 outlook, with adjusted EPS now expected between
Investors should note the upcoming CEO transition, with Tarak Mehta set to take the helm in September. This leadership change, coupled with Timken's focus on operational excellence and targeted growth initiatives, could provide new opportunities for the company's long-term growth strategy.
Timken's Q2 results offer valuable insights into the industrial sector's current dynamics. The
The performance disparity between Timken's segments is noteworthy. The Engineered Bearings segment saw an
Timken's ability to maintain robust margins (
The company's focus on acquisitions and innovation, evidenced by its recognition as one of the World's Most Innovative Companies, positions it well for future growth. However, the tempered outlook for the rest of 2024 indicates ongoing challenges in the industrial sector, particularly in end-market demand.
For investors, Timken's performance serves as a barometer for the broader industrial sector, highlighting both the challenges of global market volatility and the importance of operational efficiency and strategic positioning in maintaining profitability during downturns.
- Sales of
$1.18 billion - Second-quarter earnings per share of
$1.36 $1.63 - Net income margin of 8.1 percent; adjusted EBITDA margin of 19.5 percent
- Updates full-year 2024 outlook; now expects EPS of
$5.00 -$5.20 $6.00 -$6.20
Timken posted net income in the second quarter of
Excluding special items (detailed in the attached tables), adjusted net income in the second quarter was
Net cash from operations for the quarter was
In May, the company completed the sale of a portion of its stake in Timken India Limited (TIL), generating pre-tax proceeds of approximately
"The Timken team continues to execute well in this dynamic environment, achieving solid second-quarter results that were in line with our expectations," said Richard G. Kyle, president and chief executive officer. "We delivered strong margins in both segments, including excellent performance from our recent acquisitions. And we continued to advance our strategic initiatives during the quarter to strengthen the company for the future."
Second-Quarter 2024 Segment Results
Engineered Bearings sales of
EBITDA for the quarter was
Excluding special items, adjusted EBITDA in the quarter was
Industrial Motion sales of
EBITDA for the quarter was
Excluding special items, adjusted EBITDA in the quarter was
2024 Outlook
Timken is updating its full-year 2024 outlook, with earnings per diluted share now forecasted to be in the range of
"Our outlook reflects our solid first-half performance along with a slightly tempered view on the rest of the year," said Kyle. "We remain focused on delivering resilient performance in 2024 through operational excellence, targeted growth initiatives, and the continued execution of our strategy. In addition, we expect to generate significant free cash flow over the balance of the year, which will further fuel our ability to create shareholder value through disciplined capital allocation."
Kyle concluded, "The company's previously announced CEO succession plan remains on schedule, and we look forward to welcoming Tarak Mehta to Timken as president and CEO in early September. With a strong foundation built on 125 years of innovation and excellence, Timken is well-positioned for the next chapter of profitable growth and success under his leadership."
Conference Call Information
Timken will host a conference call today at 11 a.m. Eastern Time to review its financial results. Presentation materials will be available online in advance of the call for interested investors and securities analysts.
Conference Call: | Wednesday, July 31, 2024 |
11:00 a.m. Eastern Time | |
Live Dial-In: 833-470-1428 | |
Or 404-975-4839 | |
Access Code: 259477 | |
(Call in 10 minutes prior to be included.) | |
Conference Call Replay: | Replay Dial-In available through |
August 14, 2024: | |
866-813-9403 or 929-458-6194 | |
Replay Access Code: 540493 | |
Live Webcast: | |
Register in advance: |
About The Timken Company
The Timken Company (NYSE: TKR; www.timken.com), a global technology leader in engineered bearings and industrial motion, designs a growing portfolio of next-generation products for diverse industries. For 125 years, Timken has used its specialized expertise to innovate and create customer-centric solutions that increase reliability and efficiency. The company posted
Certain statements in this release (including statements regarding the company's forecasts, estimates, plans and expectations) that are not historical in nature are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, the statements related to expectations regarding the company's future financial performance, including information under the heading "2024 Outlook," are forward-looking.
The company cautions that actual results may differ materially from those projected or implied in forward-looking statements due to a variety of important factors, including: the finalization of the company's financial statements for the second quarter of 2024; the company's ability to respond to the changes in its end markets that could affect demand for the company's products or services; unanticipated changes in business relationships with customers or their purchases from the company; changes in the financial health of the company's customers, which may have an impact on the company's revenues, earnings and impairment charges; logistical issues associated with port closures or congestion, delays or increased costs; the impact of changes to the company's accounting methods; political risks associated with government instability; recent world events that have increased the risks posed by international trade disputes, tariffs, sanctions and hostilities; strained geopolitical relations between countries in which we have significant operations; weakness in global or regional general economic conditions and capital markets (as a result of financial stress affecting the banking system or otherwise); the impact of inflation on employee expenses, shipping costs, raw material costs, energy and fuel prices, and other production costs; the company's ability to satisfy its obligations under its debt agreements and renew or refinance borrowings on favorable terms in a high interest rate environment; fluctuations in currency valuations; changes in the expected costs associated with product warranty claims; the ability to achieve satisfactory operating results in the integration of acquired companies, including realizing any accretion, synergies, and expected cashflow generation within expected timeframes or at all; fluctuations in customer demand; the company's ability to effectively adjust prices for its products in response to changing dynamics; the impact on the company's pension obligations and assets due to changes in interest rates, investment performance and other tactics designed to reduce risk; the introduction of new disruptive technologies; unplanned plant shutdowns; the effects of government-imposed restrictions, commercial requirements, and company goals associated with climate change and emissions or other sustainability initiatives; unanticipated litigation, claims, investigations remediation, or assessments; changes in the global regulatory landscape; restrictions on the use of, or claims or remediation associated with, per- and polyfluoroalkyl substances; the company's ability to maintain positive relations with unions and works councils; the company's ability to compete for skilled labor and to attract, retain and develop management, other key employees, and skilled personnel at all levels of the organization; negative impacts to the company's operations or financial position as a result of pandemics, epidemics, or other public health concerns and associated governmental measures; and the company's ability to complete and achieve the benefits of announced plans, programs, initiatives, acquisitions and capital investments. Additional factors are discussed in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended Dec. 31, 2023, quarterly reports on Form 10-Q and current reports on Form 8-K. Except as required by the federal securities laws, the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Media Relations:
Scott Schroeder
234.262.6420
scott.schroeder@timken.com
Investor Relations:
Neil Frohnapple
234.262.2310
investors@timken.com
The Timken Company | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
(Dollars in millions, except share data) (Unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||
Net sales | $ | 1,182.3 | $ | 1,272.3 | $ | 2,372.6 | $ | 2,535.1 | |||||||||
Cost of products sold | 808.7 | 866.9 | 1,601.4 | 1,712.9 | |||||||||||||
Selling, general & administrative expenses | 184.1 | 184.9 | 374.8 | 371.7 | |||||||||||||
Amortization of intangible assets | 19.0 | 17.3 | 39.0 | 30.8 | |||||||||||||
Impairment and restructuring charges | 3.3 | 2.5 | 5.6 | 31.4 | |||||||||||||
Operating Income | 167.2 | 200.7 | 351.8 | 388.3 | |||||||||||||
Non-service pension and other postretirement (expense) income | (1.0) | — | (2.0) | 0.1 | |||||||||||||
Other income, net | 1.2 | 2.3 | 0.3 | 5.4 | |||||||||||||
Interest expense, net | (29.5) | (26.4) | (58.9) | (49.0) | |||||||||||||
Income Before Income Taxes | 137.9 | 176.6 | 291.2 | 344.8 | |||||||||||||
Provision for income taxes | 35.9 | 47.1 | 78.6 | 89.6 | |||||||||||||
Net Income | 102.0 | 129.5 | 212.6 | 255.2 | |||||||||||||
Less: Net income attributable to noncontrolling interest | 5.8 | 4.3 | 12.9 | 7.7 | |||||||||||||
Net Income Attributable to The Timken Company | $ | 96.2 | $ | 125.2 | $ | 199.7 | $ | 247.5 | |||||||||
Net Income per Common Share Attributable to The Timken Company Common Shareholders | |||||||||||||||||
Basic Earnings per share | $ | 1.37 | $ | 1.74 | $ | 2.84 | $ | 3.43 | |||||||||
Diluted Earnings per share | $ | 1.36 | $ | 1.73 | $ | 2.82 | $ | 3.39 | |||||||||
Average Shares Outstanding | 70,364,539 | 71,882,843 | 70,301,757 | 72,162,267 | |||||||||||||
Average Shares Outstanding - assuming dilution | 70,849,254 | 72,512,991 | 70,850,792 | 72,907,804 | |||||||||||||
BUSINESS SEGMENTS | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
(Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||
Engineered Bearings | ||||||||||||||
Net sales | $ | 783.4 | $ | 857.2 | $ | 1,585.9 | $ | 1,757.9 | ||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) (1) | $ | 163.3 | $ | 185.5 | $ | 342.0 | $ | 390.5 | ||||||
EBITDA Margin (1) | 20.8 | % | 21.6 | % | 21.6 | % | 22.2 | % | ||||||
Industrial Motion | ||||||||||||||
Net sales | $ | 398.9 | $ | 415.1 | $ | 786.7 | $ | 777.2 | ||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) (1) | $ | 75.6 | $ | 80.9 | $ | 152.9 | $ | 129.1 | ||||||
EBITDA Margin (1) | 19.0 | % | 19.5 | % | 19.4 | % | 16.6 | % | ||||||
Unallocated corporate expense | $ | (17.3) | $ | (13.2) | $ | (35.3) | $ | (30.9) | ||||||
Corporate pension and other postretirement benefit related income(2) | — | 1.0 | — | 1.9 | ||||||||||
Consolidated | ||||||||||||||
Net sales | $ | 1,182.3 | $ | 1,272.3 | $ | 2,372.6 | $ | 2,535.1 | ||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) (1) | $ | 221.6 | $ | 254.2 | $ | 459.6 | $ | 490.6 | ||||||
EBITDA Margin (1) | 18.7 | % | 20.0 | % | 19.4 | % | 19.4 | % | ||||||
(1) EBITDA is a non-GAAP measure defined as operating income plus other income (expense) and excluding depreciation and amortization. EBITDA Margin is a non-GAAP measure defined as EBITDA as a percentage of net sales. EBITDA and EBITDA Margin are important financial measures used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. Management believes that reporting EBITDA and EBITDA Margin is useful to investors as these measures are representative of the core operations of the segments and Company, respectively. | ||||||||||||||
(2) Corporate pension and other postretirement benefit related income primarily represents actuarial gains that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial gains and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to the Retirement Benefit Plans and Other Postretirement Benefit Plans footnotes within the Company's annual reports on Form 10-K and quarterly reports on Form 10-Q for additional discussion. | ||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
(Dollars in millions) | (Unaudited) | ||||||||||
June 30, | December 31, | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 469.9 | $ | 418.9 | |||||||
Restricted cash | 1.1 | 0.4 | |||||||||
Accounts receivable, net | 789.8 | 671.7 | |||||||||
Unbilled receivables | 148.1 | 144.5 | |||||||||
Inventories, net | 1,233.3 | 1,229.1 | |||||||||
Other current assets | 130.9 | 170.3 | |||||||||
Total Current Assets | 2,773.1 | 2,634.9 | |||||||||
Property, plant and equipment, net | 1,290.2 | 1,311.9 | |||||||||
Operating lease assets | 120.1 | 119.7 | |||||||||
Goodwill and other intangible assets | 2,317.4 | 2,401.0 | |||||||||
Other assets | 75.1 | 74.2 | |||||||||
Total Assets | $ | 6,575.9 | $ | 6,541.7 | |||||||
LIABILITIES | |||||||||||
Accounts payable | $ | 369.6 | $ | 367.2 | |||||||
Short-term debt, including current portion of long-term debt | 46.5 | 605.6 | |||||||||
Income taxes | 76.3 | 19.9 | |||||||||
Accrued expenses | 448.3 | 478.6 | |||||||||
Total Current Liabilities | 940.7 | 1,471.3 | |||||||||
Long-term debt | 2,129.9 | 1,790.3 | |||||||||
Accrued pension benefits | 160.1 | 172.3 | |||||||||
Accrued postretirement benefits | 30.4 | 30.2 | |||||||||
Long-term operating lease liabilities | 78.0 | 78.7 | |||||||||
Other non-current liabilities | 286.7 | 296.5 | |||||||||
Total Liabilities | 3,625.8 | 3,839.3 | |||||||||
EQUITY | |||||||||||
The Timken Company shareholders' equity | 2,796.8 | 2,582.4 | |||||||||
Noncontrolling interest | 153.3 | 120.0 | |||||||||
Total Equity | 2,950.1 | 2,702.4 | |||||||||
Total Liabilities and Equity | $ | 6,575.9 | $ | 6,541.7 | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
(Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||
Cash Provided by (Used in) | |||||||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||
Net Income | $ | 102.0 | $ | 129.5 | $ | 212.6 | $ | 255.2 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
Depreciation and amortization | 54.2 | 51.2 | 109.5 | 96.8 | |||||||||||||
Impairment charges | 1.9 | — | 1.9 | 28.3 | |||||||||||||
(Gain) loss on divestitures | — | 0.4 | — | (3.6) | |||||||||||||
Stock-based compensation expense | 7.0 | 6.1 | 11.5 | 17.1 | |||||||||||||
Pension and other postretirement expense | 1.7 | 0.7 | 3.3 | 1.1 | |||||||||||||
Pension and other postretirement benefit contributions and payments | (3.9) | (2.4) | (16.1) | (7.2) | |||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Accounts receivable | (25.1) | (37.1) | (131.2) | (87.4) | |||||||||||||
Unbilled receivables | (13.3) | (6.6) | (3.8) | (17.7) | |||||||||||||
Inventories | (9.5) | 9.2 | (20.6) | 15.3 | |||||||||||||
Accounts payable | (6.9) | (5.5) | 13.8 | (14.9) | |||||||||||||
Accrued expenses | 10.7 | 15.7 | (20.5) | (29.1) | |||||||||||||
Income taxes | 6.0 | (17.3) | 26.5 | (29.5) | |||||||||||||
Other, net | (0.2) | 0.1 | (13.0) | (1.8) | |||||||||||||
Net Cash Provided by Operating Activities | $ | 124.6 | $ | 144.0 | $ | 173.9 | $ | 222.6 | |||||||||
INVESTING ACTIVITIES | |||||||||||||||||
Capital expenditures | $ | (37.3) | $ | (49.6) | $ | (81.4) | $ | (91.3) | |||||||||
Acquisitions, net of cash received | (0.2) | (295.4) | (0.4) | (324.6) | |||||||||||||
Investments in short-term marketable securities, net | 1.1 | (1.6) | 20.8 | (0.8) | |||||||||||||
Other, net | 1.5 | (0.9) | 1.6 | 4.7 | |||||||||||||
Net Cash Used in Investing Activities | $ | (34.9) | $ | (347.5) | $ | (59.4) | $ | (412.0) | |||||||||
FINANCING ACTIVITIES | |||||||||||||||||
Cash dividends paid to shareholders | $ | (23.9) | $ | (23.8) | $ | (48.4) | $ | (47.4) | |||||||||
Purchase of treasury shares | (29.7) | (100.5) | (29.7) | (154.5) | |||||||||||||
Proceeds from exercise of stock options | 3.4 | 4.5 | 5.4 | 17.2 | |||||||||||||
Payments related to tax withholding for stock-based compensation | (1.1) | (1.3) | (10.0) | (15.1) | |||||||||||||
Net (payments) proceeds from credit facilities | (499.2) | 64.7 | (481.5) | 126.6 | |||||||||||||
Net proceeds (payments) on long-term debt | 287.9 | (1.9) | 286.6 | (2.6) | |||||||||||||
Proceeds on sale of shares in Timken India Limited | 232.3 | 284.8 | 232.3 | 284.8 | |||||||||||||
Other, net | (6.7) | — | (6.7) | — | |||||||||||||
Net Cash (Used in) Provided by Financing Activities | $ | (37.0) | $ | 226.5 | $ | (52.0) | $ | 209.0 | |||||||||
Effect of exchange rate changes on cash | (4.0) | (9.8) | (10.8) | (8.0) | |||||||||||||
Increase in Cash, Cash Equivalents and Restricted Cash | $ | 48.7 | $ | 13.2 | $ | 51.7 | $ | 11.6 | |||||||||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 422.3 | 339.1 | 419.3 | 340.7 | |||||||||||||
Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 471.0 | $ | 352.3 | $ | 471.0 | $ | 352.3 | |||||||||
Reconciliations of Adjusted Net Income to GAAP Net Income and Adjusted Earnings Per Share to GAAP Earnings Per Share: | ||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||
The following reconciliation is provided as additional relevant information about the Company's performance deemed useful to investors. Management believes that the non-GAAP measures of adjusted net income and adjusted diluted earnings per share are important financial measures used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. Management believes that reporting adjusted net income and adjusted diluted earnings per share is useful to investors as these measures are representative of the Company's core operations. | ||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except share data) | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
2024 | EPS | 2023 | EPS | 2024 | EPS | 2023 | EPS | |||||||||||||||||||||||||||||||||||||||
Net Income Attributable to The Timken Company | $ | 96.2 | $ | 1.36 | $ | 125.2 | $ | 1.73 | $ | 199.7 | $ | 2.82 | $ | 247.5 | $ | 3.39 | ||||||||||||||||||||||||||||||
Adjustments: (1) | ||||||||||||||||||||||||||||||||||||||||||||||
Acquisition intangible amortization | $ | 19.0 | $ | 17.3 | $ | 39.0 | $ | 30.8 | ||||||||||||||||||||||||||||||||||||||
Impairment, restructuring and reorganization charges (2) | 6.0 | 6.0 | 10.8 | 36.3 | ||||||||||||||||||||||||||||||||||||||||||
Corporate pension and other postretirement benefit related income (3) | — | (1.0) | — | (1.9) | ||||||||||||||||||||||||||||||||||||||||||
Acquisition-related charges (4) | 3.0 | 3.8 | 7.7 | 8.5 | ||||||||||||||||||||||||||||||||||||||||||
(Gain) loss on divestitures and sale of certain assets (5) | (0.2) | 0.4 | (0.9) | (4.4) | ||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interest of above adjustments | — | — | (0.1) | (0.2) | ||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes (6) | (8.8) | (5.6) | (15.3) | (17.0) | ||||||||||||||||||||||||||||||||||||||||||
Total Adjustments: | 19.0 | 0.27 | 20.9 | 0.28 | 41.2 | 0.58 | 52.1 | 0.72 | ||||||||||||||||||||||||||||||||||||||
Adjusted Net Income Attributable to The Timken Company | $ | 115.2 | $ | 1.63 | $ | 146.1 | $ | 2.01 | $ | 240.9 | $ | 3.40 | $ | 299.6 | $ | 4.11 | ||||||||||||||||||||||||||||||
(1) Adjustments are pre-tax, with the net tax provision listed separately. | ||||||||||||||||||||||||||||||||||||||||||||||
(2) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; (iv) impairment of assets; and (v) related depreciation and amortization. On March 26, 2024, the Company announced that Richard G. Kyle, President and Chief Executive Officer ("CEO") of the Company would be retiring from his position as CEO and that Tarak Mehta would be appointed CEO on September 5, 2024. Impairment, restructuring and reorganization charges for 2024 include the acceleration of certain stock compensation awards for Mr. Kyle and other one-time costs associated with the transition. Impairment, restructuring and reorganization charges for 2023 included | ||||||||||||||||||||||||||||||||||||||||||||||
(3) Corporate pension and other postretirement benefit related income represents actuarial gains that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial gains and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to the Retirement Benefit Plans and Other Postretirement Benefit Plans footnotes within the Company's annual reports on Form 10-K and quarterly reports on Form 10-Q for additional discussion. | ||||||||||||||||||||||||||||||||||||||||||||||
(4) Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact. | ||||||||||||||||||||||||||||||||||||||||||||||
(5) Represents the net (gain) loss resulting from divestitures and sale of certain assets. | ||||||||||||||||||||||||||||||||||||||||||||||
(6) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of discrete tax items recorded during the respective periods as well as other adjustments to reflect the use of one overall effective tax rate on adjusted pre-tax income in interim periods. | ||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of EBITDA to GAAP Net Income, EBITDA Margin to Net Income as a Percentage of Sales, and EBITDA Margin, After Adjustments, to Net Income as a Percentage of Sales, and EBITDA, After Adjustments, to Net Income: | |||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
The following reconciliation is provided as additional relevant information about the Company's performance deemed useful to investors. Management believes consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP measure that is useful to investors as it is representative of the Company's performance and that it is appropriate to compare GAAP net income to consolidated EBITDA. Management also believes that adjusted EBITDA, adjusted EBITDA margin and EBITDA margin are useful to investors as they are representative of the Company's core operations and are used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. | |||||||||||||||||||||||||||||
(Dollars in millions) | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
2024 | Percentage | 2023 | Percentage | 2024 | Percentage | 2023 | Percentage | ||||||||||||||||||||||
Net Income | $ | 102.0 | 8.6 | % | $ | 129.5 | 10.2 | % | $ | 212.6 | 9.0 | % | $ | 255.2 | 10.1 | % | |||||||||||||
Provision for income taxes | 35.9 | 47.1 | 78.6 | 89.6 | |||||||||||||||||||||||||
Interest expense | 34.6 | 28.3 | 66.8 | 52.4 | |||||||||||||||||||||||||
Interest income | (5.1) | (1.9) | (7.9) | (3.4) | |||||||||||||||||||||||||
Depreciation and amortization | 54.2 | 51.2 | 109.5 | 96.8 | |||||||||||||||||||||||||
Consolidated EBITDA | $ | 221.6 | 18.7 | % | $ | 254.2 | 20.0 | % | $ | 459.6 | 19.4 | % | $ | 490.6 | 19.4 | % | |||||||||||||
Adjustments: | |||||||||||||||||||||||||||||
Impairment, restructuring and reorganization charges (1) | $ | 5.8 | $ | 5.6 | $ | 10.2 | $ | 35.7 | |||||||||||||||||||||
Corporate pension and other postretirement benefit related income (2) | — | (1.0) | — | (1.9) | |||||||||||||||||||||||||
Acquisition-related charges (3) | 3.0 | 3.8 | 7.7 | 8.5 | |||||||||||||||||||||||||
(Gain) loss on divestitures and sale of certain assets (4) | (0.2) | 0.4 | (0.9) | (4.4) | |||||||||||||||||||||||||
Total Adjustments | 8.6 | 0.8 | % | 8.8 | 0.7 | % | 17.0 | 0.7 | % | 37.9 | 1.4 | % | |||||||||||||||||
Adjusted EBITDA | $ | 230.2 | 19.5 | % | $ | 263.0 | 20.7 | % | $ | 476.6 | 20.1 | % | $ | 528.5 | 20.8 | % | |||||||||||||
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; and (iv) impairment of assets. On March 26, 2024, the Company announced that Richard G. Kyle, President and CEO of the Company would be retiring from his position as CEO and that Tarak Mehta would be appointed CEO on September 5, 2024. Impairment, restructuring and reorganization charges for 2024 include the acceleration of certain stock compensation awards for Mr. Kyle and other one-time costs associated with the transition. Impairment, restructuring and reorganization charges for 2023 included | |||||||||||||||||||||||||||||
(2) Corporate pension and other postretirement benefit related income represents actuarial gains that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial gains and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to the Retirement Benefit Plans and Other Postretirement Benefit Plans footnotes within the Company's annual reports on Form 10-K and quarterly reports on Form 10-Q for additional discussion. | |||||||||||||||||||||||||||||
(3) Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact. | |||||||||||||||||||||||||||||
(4) Represents the net (gain) loss resulting from divestitures and sale of certain assets. | |||||||||||||||||||||||||||||
Reconciliation of segment EBITDA, after adjustments, to segment EBITDA, and segment EBITDA, after adjustments, as a percentage of sales to segment EBITDA, as a percentage of sales: | |||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||
The following reconciliation is provided as additional relevant information about the Company's Engineered Bearings and Industrial Motion segment performance deemed useful to investors. Management believes that non-GAAP measures of adjusted EBITDA and adjusted EBITDA margin for the segments are useful to investors as they are representative of each segment's core operations and are used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. | |||||||||||||||||||||||||||||||||||
Engineered Bearings | |||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2024 | Percentage | 2023 | Percentage | 2024 | Percentage | 2023 | Percentage | |||||||||||||||||||||||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ | 163.3 | 20.8 | % | $ | 185.5 | 21.6 | % | $ | 342.0 | 21.6 | % | $ | 390.5 | 22.2 | % | |||||||||||||||||||
Impairment, restructuring and reorganization charges (1) | 2.8 | 4.0 | 5.3 | 5.4 | |||||||||||||||||||||||||||||||
Acquisition-related charges (2) | 0.3 | 0.1 | 1.2 | 2.3 | |||||||||||||||||||||||||||||||
Gain on divestitures and sale of certain assets (3) | (0.2) | — | (0.9) | (4.8) | |||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 166.2 | 21.2 | % | $ | 189.6 | 22.1 | % | $ | 347.6 | 21.9 | % | $ | 393.4 | 22.4 | % | |||||||||||||||||||
Industrial Motion | |||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2024 | Percentage | 2023 | Percentage | 2024 | Percentage | 2023 | Percentage | |||||||||||||||||||||||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ | 75.6 | 19.0 | % | $ | 80.9 | 19.5 | % | $ | 152.9 | 19.4 | % | $ | 129.1 | 16.6 | % | |||||||||||||||||||
Impairment, restructuring and reorganization charges (1) | 1.9 | 1.5 | 3.7 | 30.2 | |||||||||||||||||||||||||||||||
Acquisition-related charges (2) | 2.2 | 3.1 | 5.2 | 3.1 | |||||||||||||||||||||||||||||||
Loss on divestitures and sale of certain assets (3) | — | 0.4 | — | 0.4 | |||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 79.7 | 20.0 | % | $ | 85.9 | 20.7 | % | $ | 161.8 | 20.6 | % | $ | 162.8 | 20.9 | % | |||||||||||||||||||
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; and (iv) impairment of assets. Impairment, restructuring and reorganization charges for 2023 included | |||||||||||||||||||||||||||||||||||
(2) The acquisition-related charges represent the inventory step-up impact of the completed acquisitions. | |||||||||||||||||||||||||||||||||||
(3) Represents the net (gain) loss resulting from divestitures and sale of certain assets. | |||||||||||||||||||||||||||||||||||
Reconciliation of Total Debt to Net Debt, the Ratio of Net Debt to Capital, and the Ratio of Net Debt to Adjusted EBITDA: | ||||||||||||||
(Unaudited) | ||||||||||||||
These reconciliations are provided as additional relevant information about the Company's financial position deemed useful to investors. Capital, used for the ratio of net debt to capital, is a non-GAAP measure defined as total debt less cash and cash equivalents plus total shareholders' equity. Management believes Net Debt, the Ratio of Net Debt to Capital, Adjusted EBITDA (see next page), and the Ratio of Net Debt to Adjusted EBITDA are important measures of the Company's financial position, due to the amount of cash and cash equivalents on hand. The Company presents net debt to adjusted EBITDA because it believes it is more representative of the Company's financial position as it is reflective of the ability to cover its net debt obligations with results from its core operations. | ||||||||||||||
(Dollars in millions) | ||||||||||||||
June 30, | December 31, | |||||||||||||
Short-term debt, including current portion of long-term debt | $ | 46.5 | $ | 605.6 | ||||||||||
Long-term debt | 2,129.9 | 1,790.3 | ||||||||||||
Total Debt | $ | 2,176.4 | $ | 2,395.9 | ||||||||||
Less: Cash and cash equivalents | (469.9) | (418.9) | ||||||||||||
Net Debt | $ | 1,706.5 | $ | 1,977.0 | ||||||||||
Total Equity | $ | 2,950.1 | $ | 2,702.4 | ||||||||||
Ratio of Net Debt to Capital | 36.6 | % | 42.2 | % | ||||||||||
Adjusted EBITDA for the Twelve Months Ended | $ | 887.8 | $ | 939.7 | ||||||||||
Ratio of Net Debt to Adjusted EBITDA | 1.9 | 2.1 | ||||||||||||
Reconciliation of Free Cash Flow to GAAP Net Cash Provided by Operating Activities: | ||||||||||||||
(Unaudited) | ||||||||||||||
Management believes that free cash flow is a non-GAAP measure that is useful to investors because it is a meaningful indicator of cash generated from operating activities available for the execution of its business strategy. | ||||||||||||||
(Dollars in millions) | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||
Net cash provided by operating activities | $ | 124.6 | $ | 144.0 | $ | 173.9 | $ | 222.6 | ||||||
Less: capital expenditures | (37.3) | (49.6) | (81.4) | (91.3) | ||||||||||
Free cash flow | $ | 87.3 | $ | 94.4 | $ | 92.5 | $ | 131.3 | ||||||
Reconciliation of EBITDA, After Adjustments, to GAAP Net Income: | ||||||||
(Unaudited) | ||||||||
The following reconciliation is provided as additional relevant information about the Company's performance deemed useful to investors. Management believes consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP measure that is useful to investors as it is representative of the Company's performance and that it is appropriate to compare GAAP net income to consolidated EBITDA. Management also believes that the non-GAAP measure of adjusted EBITDA is useful to investors as it is representative of the Company's core operations and is used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. | ||||||||
(Dollars in millions) | Twelve Months Ended | Twelve Months Ended | ||||||
Net Income | $ | 365.4 | $ | 408.0 | ||||
Provision for income taxes | 111.5 | 122.5 | ||||||
Interest expense | 125.1 | 110.7 | ||||||
Interest income | (13.8) | (9.3) | ||||||
Depreciation and amortization | 214.0 | 201.3 | ||||||
Consolidated EBITDA | $ | 802.2 | $ | 833.2 | ||||
Adjustments: | ||||||||
Impairment, restructuring and reorganization charges (1) | $ | 33.8 | $ | 59.3 | ||||
Corporate pension and other postretirement benefit related expense (2) | 22.5 | 20.6 | ||||||
Acquisition-related charges (3) | 31.0 | 31.8 | ||||||
Gain on divestitures and sale of certain assets (4) | (1.7) | (5.2) | ||||||
Total Adjustments | 85.6 | 106.5 | ||||||
Adjusted EBITDA | $ | 887.8 | $ | 939.7 | ||||
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives; and (iv) impairment of assets. On March 26, 2024, the Company announced that Richard G. Kyle, President and CEO of the Company would be retiring from his position as CEO and that Tarak Mehta would be appointed CEO on September 5, 2024. Impairment, restructuring and reorganization charges for 2024 include the acceleration of certain stock compensation awards for Mr. Kyle and other one-time costs associated with the transition. In addition, impairment, restructuring and reorganization charges for the twelve months ended December 31, 2023 included | ||||||||
(2) Corporate pension and other postretirement benefit related expense represents actuarial losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial losses and gains in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. | ||||||||
(3) Acquisition-related charges represent deal-related expenses associated with completed transactions and any resulting inventory step-up impact. | ||||||||
(4) Represents the net gain resulting from divestitures and sale of certain assets. | ||||||||
Reconciliation of Net Sales to Organic Sales | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
The following reconciliation is provided as additional relevant information about the Company's performance deemed useful to investors. Management believes that net sales, excluding the impact of acquisitions, divestitures and foreign currency exchange rate changes, allow investors and the Company to meaningfully evaluate the percentage change in net sales on a comparable basis from period to period. | ||||||||||||||||||||
Three Months Ended | Three Months Ended | $ Change | % Change | |||||||||||||||||
Net sales | $ | 1,182.3 | $ | 1,272.3 | $ | (90.0) | (7.1) | % | ||||||||||||
Less: Acquisitions and divestitures | 21.9 | — | 21.9 | NM | ||||||||||||||||
Currency | (13.7) | — | (13.7) | NM | ||||||||||||||||
Net sales, excluding the impact of acquisitions, divestitures and currency | $ | 1,174.1 | $ | 1,272.3 | $ | (98.2) | (7.7) | % | ||||||||||||
Reconciliation of Adjusted Earnings per Share to GAAP Earnings per Share for Full Year 2024 Outlook: | |||||||||||
(Unaudited) | |||||||||||
The following reconciliation is provided as additional relevant information about the Company's outlook deemed useful to investors. Forecasted full year adjusted diluted earnings per share is an important financial measure that management believes is useful to investors as it is representative of the Company's expectation for the performance of its core business operations. | |||||||||||
Low End Earnings | High End Earnings | ||||||||||
Forecasted full year GAAP diluted earnings per share | $ | 5.00 | $ | 5.20 | |||||||
Forecasted Adjustments: | |||||||||||
Impairment, restructuring and other special items, net (1) | 0.20 | 0.20 | |||||||||
Acquisition-related intangible amortization expense, net | 0.80 | 0.80 | |||||||||
Forecasted full year adjusted diluted earnings per share | $ | 6.00 | $ | 6.20 | |||||||
(1) Impairment, restructuring and other special items, net do not include the impact of any potential future mark-to-market pension and other postretirement remeasurement adjustments, because the amounts will not be known until incurred. | |||||||||||
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SOURCE The Timken Company
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