The Timken Company (NYSE: TKR) today reported sales of $960.4
million during the first quarter of 2009, a decrease of 33 percent
over the same period a year ago. Significant volume declines due to
weaker demand across most of the company�s end markets and the
impact of lower surcharges and currency more than offset benefits
from pricing and mix.
First-quarter net income was $0.9 million, or $0.01 per diluted
share, compared with $84.5 million, or $0.88 per diluted share, in
the first quarter of 2008. Excluding special items, net income was
$7.1 million or $0.07 per diluted share for the first quarter of
2009, compared with $78.9 million or $0.82 per diluted share in the
prior-year period. Lower first-quarter earnings reflect decreased
demand across most of the company�s market sectors and the timing
impact of the company�s material surcharge recovery mechanism.
Partially offsetting these items were favorable pricing, mix, and
lower selling, general and administrative costs.
Special items, net of tax, in the first quarter of 2009 totaled
$6.2 million of expense compared with $5.6 million of income in the
same period last year. Special items in 2009 were primarily related
to severance and impairment charges, while 2008 included a gain on
a sale of assets.
�It�s now clear that the impact of the recession on the demand
for our products will be deeper and longer lasting than we
anticipated. In the short term, we are managing the company with a
heightened emphasis on cash flow,� said James W. Griffith, Timken
president and chief executive officer. �At the same time, we are
taking actions to structure the company for profitability, even at
current levels of demand, including efforts to strengthen our
portfolio while improving the competitiveness of our manufacturing
base.�
Accelerating Cost and
Employment Reductions
The company has doubled its targeted reduction in selling and
administrative costs to approximately $80 million annually. This
will be achieved through reductions in professional staff, overhead
costs and discretionary expenditures. In addition, compensation
costs are expected to be down approximately $60 million in 2009
associated with the company�s performance-based incentive
plans.
The company also is implementing further reductions in its
manufacturing workforce targeted to better align capacity with
demand. By the end of this year, the total reduction in operative
and professional employment is expected to exceed 7,000 positions,
or over 25 percent of the workforce since the beginning of 2008.
During 2009, the company expects to record special charges of
approximately $70 million primarily associated with these
actions.
Maintaining Strong Balance
Sheet and Liquidity
The company continues to maintain a strong balance sheet with
ample liquidity. In addition to cash and cash equivalents of $112.0
million at March 31, 2009, the company had approximately $900
million available under various credit facilities.
Total debt was $630.3 million as of March 31, 2009, or 28.1
percent of capital. Net debt at March 31, 2009, was $518.3 million,
or 24.3 percent of capital, compared with $507.5 million, or 23.4
percent, as of Dec. 31, 2008. During the quarter the company
generated cash flow from operating activities of $37.4 million,
driven by inventory reductions. The company expects to end 2009
with lower net debt and leverage than last year, providing
additional financial flexibility.
Dividend
Declaration
As part of the effort to preserve the company�s strong balance
sheet and liquidity, Timken�s board of directors reduced the
quarterly dividend by 50 percent, declaring a quarterly cash
dividend of 9 cents per share. The dividend is payable June 2, 2009
to shareholders of record as of May 22, 2009. It will be the 348th
consecutive dividend paid on the common stock of the company.
Bearings and Power
Transmission Group Results
The Bearings and Power Transmission Group had first-quarter
sales of $728.7 million, down 31 percent from $1.05 billion for the
same period last year. Earnings before interest and taxes (EBIT)
for the first quarter were $40.7 million, down 58 percent from
$96.8 million in the first quarter of 2008.
Mobile Industries Segment
Results
In the first quarter, Mobile Industries sales were $372.9
million, a decrease of 41 percent from $635.3 million for the same
period a year ago. The significant decline in sales was driven by
weaker demand across all market sectors and the impact of currency,
partially offset by favorable pricing. The greatest declines
occurred in the heavy-truck and light-vehicle sectors, which were
down approximately 50 percent.
Mobile Industries incurred an EBIT loss of $24.9 million
compared with EBIT of $30.6 million for the same period a year ago.
The impact of lower demand and resulting manufacturing capacity
underutilization reduced earnings by approximately $100 million.
This was partially offset by improved pricing and reduced selling
and administrative costs of approximately $50 million.
Process Industries Segment
Results
Process Industries had first-quarter sales of $243.2 million,
down 22 percent from $312.6 million for the same period a year ago.
Lower demand across most industrial market sectors and currency
more than offset favorable pricing. Sales into the metals, power
transmission and aggregate sectors experienced the largest declines
while power generation products were up from the same period a year
ago.
First-quarter EBIT was $47.0 million, down 20 percent from $59.0
million in the same period a year ago. Lower EBIT primarily
resulted from volume, mix and currency, which was partially offset
by pricing.
Aerospace and Defense Segment
Results
Aerospace and Defense had first-quarter sales of $112.7 million,
up 10 percent from $102.1 million for the same period last year.
The increase was driven by demand, favorable pricing and
acquisitions. The company acquired EXTEX, a leading designer and
marketer of high-quality replacement engine parts for the aerospace
aftermarket, in November 2008. The EXTEX acquisition accounted for
approximately 30 percent of the sales increase.
First-quarter EBIT was $18.6 million, up 159 percent from $7.2
million in the same period a year ago. Performance benefited
primarily from pricing and manufacturing improvements.
Steel Group
Results
Sales for the Steel Group, including inter-group sales, were
$248.6 million, a decrease of 42 percent from $425.0 million for
the same period last year. The decline was driven by lower demand
across all market sectors, ranging from the service center sector,
down approximately 15 percent, to the automotive sector, down
approximately 60 percent from the same period a year ago. Sales
were also impacted by a significant decline in raw-material
surcharges of approximately $80 million from the first quarter last
year.
The Steel Group incurred an EBIT loss of $7.3 million compared
with EBIT of $53.4 million for the same period a year ago. The
decline primarily resulted from lower demand of approximately $30
million and underutilization of manufacturing capacity of roughly
$30 million. Lower surcharges of about $80 million were offset by
approximately $50 million in favorable material costs and a change
in LIFO of approximately $30 million. The change in LIFO was due to
expected lower year-end inventory quantities and material
costs.
Outlook
The company now expects the impact of the global recession to
continue through the rest of the year with sales in most of its
market sectors being down significantly from last year. Steel Group
sales are expected to decline approximately 55 to 65 percent for
the year due to lower surcharges and demand across all sectors.
Mobile Industries sales are expected to be down approximately 30 to
35 percent for the year, driven by lower North American
light-vehicle production, and significant declines in heavy-truck
builds in North America and Europe. Process Industries sales are
expected to be down by about 25 to 30 percent in 2009, with
broad-based volume declines in most end markets, especially heavy
industrial equipment. Sales in the Aerospace and Defense segment
are expected to be up approximately 5 to 10 percent for 2009,
driven by a strong defense sector, while recent softening in the
civil sector is expected to have a minimal effect given current
order backlogs.
As a result of the company�s global market outlook, it now
expects earnings per diluted share for 2009, excluding special
items, to be $-0.15 to $0.15. Despite the lower earnings outlook,
the company expects to generate strong cash from operations in
2009, driven by lower working capital. In addition, the company
will significantly reduce capital spending from 2008 levels, and
will continue to take the actions required to manage in the current
environment while maintaining its strong liquidity and balance
sheet.
Conference Call
Information
The company will host a conference call for investors and
analysts today to discuss financial results.
Conference Call: � � � Monday, April 27, 2009 11 a.m. Eastern Time
� Live Dial-In: 800-344-0593 or 706-634-0975 (Call in 10 minutes
prior to be included.) Conference ID: 68490587 � Replay Dial-In
through May 4, 2009: 800-642-1687 or 706-645-9291 � Live Webcast:
www.timken.com/investors
About The Timken
Company
The Timken Company keeps the world turning, with innovative
friction management and power transmission products and services,
enabling our customers� machinery to perform more efficiently and
reliably. With sales of $5.7 billion in 2008 and operations in 26
countries, Timken is Where You Turn� for better performance.
Certain statements in this news release (including statements
regarding the company's forecasts, estimates 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 and cost
reduction initiatives, including the information under the headings
�Accelerating Cost and Employment Reductions� and �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 first quarter of 2009; the company�s ability to respond to
the changes in its end markets that could affect demand for the
company�s products; unanticipated changes in business relationships
with customers or their purchases from the company; changes in the
financial health of the company�s customers, including any
disruptions or bankruptcies in the automotive industry which may
have an impact on the company�s revenues, earnings and impairment
charges; fluctuations in raw-material and energy costs and their
impact on the operation of the company�s surcharge mechanisms; the
impact of the company�s LIFO accounting; changes in global economic
conditions and financial markets; changes in the expected costs
associated with product warranty claims; the results of the
company�s discussions with the union that represents company
associates at the Canton area manufacturing facilities; the impact
on operations of general economic conditions, higher or lower
raw-material and energy costs, fluctuations in customer demand; and
the company's ability to achieve the benefits of its future and
ongoing programs and initiatives, including, without limitation,
the initiative to reduce its employment levels and other costs, the
implementation of its Mobile Industries Segment restructuring
program and initiatives and the rationalization of the company�s
Canton bearing operations. These and additional factors are
described in greater detail in the company's Annual Report on Form
10-K for the year ended Dec. 31, 2008, page 44. The company
undertakes no obligation to update or revise any forward-looking
statement.
(Unaudited) � � � � �
CONDENSED CONSOLIDATED STATEMENT OF
INCOME �
AS REPORTED ADJUSTED (1) (Dollars in
thousands, except share data) �
Q1 2009 � Q1 2008
Q1
2009 � Q1 2008 Net sales
$ 960,378 $ 1,434,670
$ 960,378 $ 1,434,670 Cost of products sold
807,061 1,121,759
807,061 1,121,759
Manufacturing
rationalization/reorganization expenses - cost of products sold
� �
1,191 � � � 1,374 � �
- � � � - �
Gross
Profit $ 152,126 $ 311,537
$
153,317 $ 312,911 Selling, administrative & general
expenses (SG&A)
138,722 177,138
138,722 177,138
Manufacturing
rationalization/reorganization expenses - SG&A
274 808
- - Gain on divestitures
- (8 )
- - Impairment and restructuring � �
14,744 � � �
2,876 � �
- � � � - �
Operating (Loss) Income
$ (1,614 ) $ 130,723
$ 14,595 $
135,773 Other income (expense)
6,246 (4,888 )
6,246
(4,888 ) Special items - other income � �
1,222 � � � 20,355
� �
- � � � - �
Earnings Before Interest and Taxes
(EBIT) $ 5,854 $ 146,190
$ 20,841 $
130,885 Interest expense, net � �
(8,084 ) � � (9,600
) �
(8,084 ) � � (9,600 )
(Loss) Earnings Before
Income Taxes (2,230 ) 136,590
12,757
121,285 Provision for income taxes � �
2,848 � � � 51,240 �
� � �
5,471 � � � 41,538 �
Net (Loss) Income $
(5,078 ) $ 85,350
$ 7,286 $ 79,747
Less: net (loss) income
attributable to noncontrolling interest
� �
(5,948 ) � � 885 � � � �
183 � � � 885 �
Net Income Attributable to The Timken Company �
$
870 � � $ 84,465 � � �
$ 7,103 � � $ 78,862 �
�
Net Income per Common Share
Attributable to The Timken Company Common Shareholders:
�
Basic Earnings Per Share $ 0.01 $ 0.88
$ 0.07 $ 0.83 �
Diluted Earnings Per Share
$ 0.01 $ 0.88
$ 0.07 $ 0.82 � Average
Shares Outstanding
96,028,860 95,254,264
96,028,860
95,254,264 Average Shares Outstanding - assuming dilution � �
96,164,988 � � � 95,982,217 � � �
96,164,988 � � �
95,982,217 � �
BUSINESS SEGMENTS � � � �
(Dollars in
thousands) (Unaudited) �
Q1 2009 � Q1 2008
Mobile Industries Segment
� � Net sales to external customers
$ 372,864 $
635,252 Adjusted (loss) earnings before interest and taxes (EBIT)
(2)
$ (24,879 ) $ 30,566 Adjusted EBIT Margin
(2)
-6.7 % 4.8 % �
Process Industries Segment
Net sales to external customers
$ 242,284 $ 312,212
Intergroup sales
�
922 � � � 410 � Total net sales
$ 243,206 $
312,622 Adjusted earnings before interest and taxes (EBIT) (2)
$ 47,017 $ 59,037 Adjusted EBIT Margin (2)
19.3 % 18.9 % �
Aerospace and Defense Segment
Net sales to external customers
$ 112,665 $ 102,132
Adjusted earnings before interest and taxes (EBIT) (2)
$
18,553 $ 7,162 Adjusted EBIT Margin (2)
16.5 %
7.0 % �
Total Bearings and Power Transmission
Group
Net sales to external customers
$ 727,813 $ 1,049,596
Intergroup sales �
922 � � � 410 � Total net sales
$
728,735 $ 1,050,006 Adjusted earnings before interest and
taxes (EBIT) (2)
$ 40,691 $ 96,765 Adjusted EBIT
Margin (2)
5.6 % 9.2 % �
Steel Group
Net sales to external customers
$ 232,565 $ 385,074
Intergroup sales �
16,003 � � � 39,914 � Total net sales
$ 248,568 $ 424,988 Adjusted (loss) earnings before
interest and taxes (EBIT) (2)
$ (7,262 ) $
53,379 Adjusted EBIT Margin (2)
-2.9 % 12.6 % � �
Unallocated corporate expense $ (12,330
) $ (16,425 ) � Intergroup eliminations expense (3)
$
(258 ) $ (2,834 ) �
Consolidated
Net sales to external customers
$ 960,378 $ 1,434,670
Adjusted earnings before interest and taxes (EBIT) (2)
$
20,841 $ 130,885 Adjusted EBIT Margin (2)
2.2
% 9.1 % � (1) "Adjusted" statements exclude the impact of
impairment and restructuring, manufacturing
rationalization/reorganization and special charges and credits for
all periods shown. � (2) EBIT is defined as operating income plus
other income (expense). EBIT Margin is EBIT as a percentage of net
sales. EBIT and EBIT margin on a segment basis exclude certain
special items set forth above. EBIT and EBIT 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 EBIT
and EBIT Margin best reflect the performance of the company's
business segments and EBIT disclosures are responsive to investors.
�
(3) Intergroup eliminations
represent intergroup profit or loss between the Steel Group and the
Bearings and Power Transmission Group.
�
Reconciliation of GAAP net income attributable to the Timken
Co. and EPS - diluted
This reconciliation is provided as
additional relevant information about the company's performance.
Management believes adjusted net income and adjusted earnings per
share are more representative of the company's performance and
therefore useful to investors. Management also believes that it is
appropriate to compare GAAP net income to adjusted net income in
light of special items related to impairment and restructuring and
manufacturing rationalization/reorganization costs, Continued
Dumping and Subsidy Offset Act (CDSOA) receipts, and gain/loss on
the sale of non-strategic assets.
� � � � �
First Quarter � �
2009 � 2008
(Dollars
in thousands, except per share data) (Unaudited) �
$ �
EPS (1) � $ � EPS (1) � Net income attributable to The
Timken Company
$ 870 $ 0.01 $ 84,465 $
0.88 � Pre-tax special items:
Manufacturing
rationalization/reorganization expenses - cost of products sold
1,191 0.01 1,374 0.01 Manufacturing
rationalization/reorganization expenses - SG&A
274
- 808 0.01 Gain on divestitures
- - (8 ) -
Impairment and restructuring
14,744 0.15 2,876 0.03
Special items - other income
(1,222 ) (0.01
) (20,355 ) (0.21 ) Provision for income taxes (2)
(2,623 ) (0.03 ) 9,702 0.10 Less: net
loss attributable to noncontrolling interest �
(6,131
) � �
(0.06 ) � � - � � � - � Adjusted net
income attributable to The Timken Company
$ 7,103 � �
$ 0.07 � � $ 78,862 � � $ 0.82 � � (1) EPS amounts
may not sum due to rounding differences. � (2) Provision for income
taxes includes adjustments to remove the income taxes associated
with pre-tax special items and the impact of discrete tax items
recorded during the period(s) and to reflect one overall effective
tax rate on Adjusted pre-tax income. �
Reconciliation of Outlook
Information
Expected earnings per diluted share for the 2009 full year excludes
special items. Examples of such special items include impairment
and restructuring, manufacturing rationalization/reorganization
expenses, gain/loss on the sale of non-strategic assets and
payments under the CDSOA. It is not possible at this time to
identify the potential amount or significance of these special
items. Management cannot predict whether the company will receive
any additional payments under the CDSOA in 2009 and if so, in what
amount. If the company does receive any CDSOA payments, they will
most likely be received in the fourth quarter. �
Reconciliation
of GAAP earnings before income taxes
This reconciliation is provided as
additional relevant information about the company's performance.
Management believes Consolidated adjusted earnings before interest
and taxes (EBIT) and Total Bearings and Power Transmission Group
adjusted EBIT are more representative of the company's performance
and therefore useful to investors. Management also believes that it
is appropriate to compare GAAP Income from Continuing Operations
before Income Taxes to Consolidated adjusted EBIT in light of
special items related to impairment and restructuring and
manufacturing rationalization/reorganization costs, Continued
Dumping and Subsidy Offset Act (CDSOA) receipts, and gain/loss on
the sale of non-strategic assets.
� � � �
First Quarter � �
2009 � 2008
(Thousands
of U.S. dollars) (Unaudited) �
$ � $ � (Loss) earnings
before income taxes
$ (2,230 ) $ 136,590 �
Pre-tax reconciling items: Interest expense
8,474 10,997
Interest income
(390 ) (1,397 )
Manufacturing
rationalization/reorganization expenses - cost of products sold
1,191 1,374 Manufacturing rationalization/reorganization
expenses - SG&A
274 808 Gain on divestitures
- (8
) Impairment and restructuring
14,744 2,876 Special items -
other income
(1,222 ) (20,355 ) � � � Consolidated
adjusted earnings before interest and taxes (EBIT)
$
20,841 � � $ 130,885 � �
Steel Group adjusted earnings
(loss) before interest and taxes (EBIT)
7,262 (53,379 ) Unallocated corporate expense
12,330
16,425 Intergroup eliminations expense
258 2,834 � Total
Bearings and Power Transmission Group adjusted earnings before
interest and taxes (EBIT) � � �
$ 40,691 � � $ 96,765
� �
Reconciliation of Total Debt to Net Debt and the Ratio of
Net Debt to Capital: (Dollars in thousands) (Unaudited)
March 31, 2009 � Dec. 31, 2008 Short-term debt
$
368,861 � $ 108,590 Long-term debt �
261,413 � � �
515,250 � Total Debt
630,274 623,840 Less: Cash and cash
equivalents �
(112,012 ) � � (116,306 ) Net Debt
$ 518,262 � � $ 507,534 � � Shareholders' equity
$ 1,610,866 $ 1,663,038 � Ratio of Total Debt to
Capital
28.1 % 27.3 %
Ratio of Net Debt to Capital
(Leverage)
�
24.3 % � � 23.4 % � This reconciliation is provided
as additional relevant information about The Timken Company's
financial position. Capital is defined as total debt plus
shareholders' equity. � Management believes Net Debt is more
indicative of Timken's financial position due to the amount of cash
and cash equivalents. �
CONDENSED CONSOLIDATED BALANCE SHEET
�
March 31, � Dec 31,
(Dollars in thousands)
(Unaudited) �
2009 � 2008
ASSETS Cash & cash
equivalents
$ 112,012 $ 116,306 Accounts receivable
538,804 609,397 Inventories
1,060,399 1,145,695 Other
current assets � �
159,918 � � 162,067
Total Current
Assets 1,871,133 2,033,465 Property, plant &
equipment
1,698,258 1,743,866 Goodwill
228,132
230,049 Other assets � �
520,350 � � 528,670
Total
Assets �
$ 4,317,873 � $ 4,536,050 �
LIABILITIES Accounts payable & other liabilities
$ 342,475 $ 443,430 Short-term debt
368,861
108,590 Income taxes
16,422 27,598 Accrued expenses � �
156,563 � � 218,695
Total Current Liabilities
884,321 798,313 Long-term debt
261,413 515,250
Accrued pension cost
842,172 844,045 Accrued postretirement
benefits cost
611,439 613,045 Other non-current liabilities
� �
107,662 � � 102,359
Total Liabilities
2,707,007 2,873,012 �
EQUITY Timken Company
shareholders' equity
1,593,603 1,640,244 Noncontrolling
interest � �
17,263 � � 22,794
Total Equity � �
1,610,866 � � 1,663,038
Total Liabilities and Equity
�
$ 4,317,873 � $ 4,536,050 �
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS � For the three months
ended
Mar. 31, � Mar. 31,
(Dollars in thousands)
(Unaudited) �
2009 � 2008
Cash Provided (Used)
OPERATING ACTIVITIES Net Income
$ 870 $ 84,465
Adjustments to reconcile net
income to net cash provided by operating activities:
Depreciation and amortization
57,466 57,475 Pension and
other postretirement expense
27,584 25,811 Pension and other
postretirement benefit payments
(15,086 ) (25,867 )
Accounts receivable
61,071 (71,624 ) Inventories
65,434 (68,578 ) Accounts payable and accrued expenses
(155,809 ) (1,973 ) Other �
(4,082 ) �
� (12,620 )
Net Cash Provided (Used) by Operating Activities
37,448 (12,911 ) �
INVESTING ACTIVITIES Capital
expenditures
(33,562 ) (52,417 ) Other
4,034
29,175 Acquisitions �
(42 ) � � (55,329 )
Net Cash
Used by Investing Activities (29,570 ) (78,571 )
�
FINANCING ACTIVITIES Cash dividends paid to shareholders
(17,424 ) (16,320 ) Net proceeds from common share
activity
1,648 1,587 Net borrowings (payments) on credit
facilities �
6,034 � � � 139,556 �
Net Cash (Used)
Provided by Financing Activities (9,742 ) 124,823
� Effect of exchange rate changes on cash
(2,430 )
4,721 �
(Decrease) Increase in Cash and Cash Equivalents
(4,294 ) 38,062
Cash and Cash Equivalents at
Beginning of Period �
116,306 � � � 30,144 � �
Cash
and Cash Equivalents at End of Period $ 112,012 �
� $ 68,206 �
Grafico Azioni Timken (NYSE:TKR)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Timken (NYSE:TKR)
Storico
Da Lug 2023 a Lug 2024