NORTH CANTON, Ohio,
May 1, 2018 /PRNewswire/ -- The
Timken Company (NYSE: TKR; www.timken.com), a world leader in
engineered bearings and mechanical power transmission
products, today reported first-quarter 2018 sales
of $883.1 million, up approximately 25 percent from the
same period a year ago. The increase was driven by strong organic
growth across most end-market sectors led by industrial
distribution and off-highway, as well as the benefit of
acquisitions and currency.
![The Timken Company Logo. (PRNewsfoto/The Timken Company) The Timken Company Logo. (PRNewsfoto/The Timken Company)](https://mma.prnewswire.com/media/647794/TIMKEN_COMPANY_Logo.jpg)
In the first quarter, Timken posted net income
of $80.2 million or $1.02 per diluted share,
versus net income of $38.2 million or $0.48 per
diluted share for the same period a year ago. In the current
quarter, the company benefitted from higher volume, favorable
price/mix and manufacturing performance, and the impact of
acquisitions, which were partially offset by higher selling,
general and administrative (SG&A) and logistics costs. The
current quarter also reflects lower pension-related charges and a
lower tax rate.
Excluding special items (detailed in the attached tables),
adjusted net income in the first quarter of 2018
was $80 million or $1.01 per diluted share, up
from $43.7 million
or $0.55 per diluted share for the same period in
2017.
"We achieved excellent first-quarter results, reporting strong
revenue and earnings growth with expanded margins," said
Richard G. Kyle, Timken president
and chief executive officer. "Over the last several years, we have
grown our portfolio organically and through acquisition, expanded
our geographic reach and improved our cost structure. As a
result of these strategic actions, we are winning with our
customers and outgrowing our markets."
First-Quarter 2018 Segment Results
Mobile Industries reported sales of $488.5 million,
up 27.5 percent compared with the same period a year ago.
Acquisitions added revenue of $43.1
million in the quarter, or 11.3 percent. Excluding
acquisitions, revenue was up 16.2 percent, driven primarily by
increased demand in the off-highway, heavy truck and rail sectors,
and favorable currency.
Earnings before interest and taxes (EBIT) in the quarter
were $51.1 million or 10.5 percent of sales,
compared with EBIT of $32.6 million or 8.5 percent
of sales for the same period a year ago. The increase in EBIT
reflects the impact of higher volume and the benefit of
acquisitions, partially offset by higher SG&A and logistics
costs. The current period also reflects lower restructuring
charges.
Excluding special items (detailed in the attached tables),
adjusted EBIT in the quarter was $51.8 million
or 10.6 percent of sales, compared
with $36.6 million or 9.6 percent of sales in the
first quarter last year.
Process Industries sales of $394.6 million
increased 23 percent from the same period a year ago, driven
primarily by strong demand across the industrial sectors, including
distribution, original equipment and services, as well as favorable
currency.
EBIT for the quarter was $81.6 million
or 20.7 percent of sales, compared with EBIT
of $44.1 million or 13.7 percent of sales for
the same period a year ago. The increase in EBIT was driven by
higher volume and favorable price/mix and manufacturing
performance, partially offset by higher SG&A and logistics
costs.1
2018 Outlook
"We are raising our outlook for the year as a result of the
momentum we are seeing in our end markets and our confidence in our
ability to execute," said Kyle. "As we continue to advance
our strategy and stay focused on creating customer value, Timken is
positioned to reach new levels of performance in 2018."
The company now expects 2018 revenue to be up approximately 17
percent in total versus 2017. This includes expected organic growth
of approximately 12 percent plus the benefit of acquisitions made
during 2017 and favorable currency. Within its segments, the
company estimates for full-year 2018:
- Mobile Industries sales to be up approximately 17 percent,
driven primarily by organic growth in the off-highway, heavy truck
and rail sectors, as well as the benefit of acquisitions and
favorable currency.
- Process Industries sales to be up approximately 17 percent,
reflecting broad growth across the industrial sectors, including
distribution, original equipment and services, as well as favorable
currency.
Timken now anticipates 2018 earnings per diluted share to range
from $3.80 to $3.90 for the full year on a GAAP basis.
Excluding special items (detailed in the attached tables), the
company expects 2018 adjusted earnings per diluted share to range
from $3.90 to $4.00.
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:
|
Tuesday, May 1,
2018
|
|
11 a.m. Eastern
Time
|
|
Live Dial-In:
800-239-9838 or 323-794-2551
|
|
(Call in 10 minutes
prior to be included.)
|
|
Conference ID:
Timken's 1Q Earnings Call
|
|
|
Conference Call
Replay:
|
Replay Dial-In
available through May 15, 2018:
|
|
888-203-1112 or
719-457-0820
|
|
Replay Passcode:
9332277
|
|
|
Live
Webcast:
|
http://investors.timken.com
|
1 Adjusted EBIT is not shown separately, as there
were no special items affecting Process Industries results in the
current quarter.
About The Timken Company
The Timken Company (NYSE: TKR; www.timken.com) engineers,
manufactures and markets bearings, gear drives, automated
lubrication systems, belts, chain, couplings and related products,
and offers a spectrum of powertrain rebuild and repair services.
The leading authority on tapered roller bearings, Timken today
applies its deep knowledge of metallurgy, tribology and mechanical
power transmission across a variety of bearings and related systems
to improve the reliability and efficiency of machinery and
equipment all around the world. The company's growing product and
services portfolio features many strong industrial brands including
Timken®, Fafnir®, Philadelphia
Gear®, Groeneveld®, Drives® and
Lovejoy®. Known for its quality products and
collaborative technical sales model, Timken posted $3 billion in sales in 2017. With more than
15,000 employees operating from 33 countries, Timken makes the
world more productive and keeps industry in motion.
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
"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 2018; 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, which may have an
impact on the company's revenues, earnings and impairment charges;
fluctuations in raw material and energy costs; the impact of
changes to the company's accounting methods, including the actual
impact of the adoption of mark-to-market accounting;
weakness in global or regional economic conditions and capital
markets; 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; the impact on operations of general economic
conditions; fluctuations in customer demand; the impact on the
company's pension obligations due to changes in interest rates,
investment performance and other tactics designed to reduce risk;
the company's ability to complete and achieve the benefits of
announced plans, programs, initiatives, and capital investments;
the actual impact of the Tax Cuts and Jobs Act of 2017 on the
full-year 2018 global effective tax rate; and retention of CDSOA
distributions. 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, 2017, 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:
234.262.3514
mediarelations@timken.com
Investor Relations:
Jason
Hershiser
234.262.7101
jason.hershiser@timken.com
|
|
|
|
|
|
|
|
The Timken
Company
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
(Unaudited)
|
|
|
(Dollars in millions,
except per share data)
|
Three Months
Ended
March 31,
|
|
2018
|
2017
|
|
|
|
Net sales
|
$
|
883.1
|
|
$
|
703.8
|
|
Cost of products
sold
|
618.2
|
|
521.6
|
|
Gross
Profit
|
264.9
|
|
182.2
|
|
Selling, general
& administrative expenses
|
148.6
|
|
117.6
|
|
Impairment and
restructuring charges
|
0.2
|
|
1.7
|
|
Operating
Income
|
116.1
|
|
62.9
|
|
Other income
(expense), net
|
2.3
|
|
(2.0)
|
|
Earnings Before
Interest and Taxes (EBIT) (1)
|
118.4
|
|
60.9
|
|
Interest expense,
net
|
(9.6)
|
|
(7.3)
|
|
Income Before
Income Taxes
|
108.8
|
|
53.6
|
|
Provision for income
taxes
|
28.3
|
|
15.5
|
|
Net
Income
|
80.5
|
|
38.1
|
|
Less: Net income
(loss) attributable to noncontrolling interest
|
0.3
|
|
(0.1)
|
|
Net Income
Attributable to The Timken Company
|
$
|
80.2
|
|
$
|
38.2
|
|
Net Income per
Common Share Attributable to The Timken Company Common
Shareholders
|
|
|
Basic Earnings per
share
|
$
|
1.03
|
|
$
|
0.49
|
|
|
|
|
Diluted Earnings per
share
|
$
|
1.02
|
|
$
|
0.48
|
|
|
|
|
Average Shares
Outstanding
|
|
77,734,153
|
|
|
77,731,793
|
|
Average Shares
Outstanding - assuming dilution
|
|
79,013,185
|
|
|
78,893,954
|
|
|
|
|
(1) EBIT is a non-GAAP measure
defined as operating income plus other income (expense). EBIT is an
important financial measure used in the management of the business,
including decisions concerning the allocation of resources and
assessment of performance. Management believes that reporting EBIT
is useful to investors as this measure is representative of the
Company's core operations.
|
|
|
|
|
|
|
|
|
BUSINESS
SEGMENTS
|
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
(Dollars in
millions)
|
2018
|
2017
|
|
|
|
Mobile
Industries
|
|
|
Net sales
|
$
|
488.5
|
|
$
|
383.0
|
|
Earnings before
interest and taxes (EBIT) (1)
|
$
|
51.1
|
|
$
|
32.6
|
|
EBIT Margin
(1)
|
10.5
|
%
|
8.5
|
%
|
Process
Industries
|
|
|
Net sales
|
$
|
394.6
|
|
$
|
320.8
|
|
Earnings before
interest and taxes (EBIT) (1)
|
$
|
81.6
|
|
$
|
44.1
|
|
EBIT Margin
(1)
|
20.7
|
%
|
13.7
|
%
|
Corporate
expense
|
$
|
(14.3)
|
|
$
|
(15.8)
|
|
|
|
|
Consolidated
|
|
|
Net sales
|
$
|
883.1
|
|
$
|
703.8
|
|
Earnings before
interest and taxes (EBIT) (1)
|
$
|
118.4
|
|
$
|
60.9
|
|
EBIT
Margin (1)
|
13.4
|
%
|
8.7
|
%
|
|
|
|
(1) EBIT
is a non-GAAP measure defined as operating income plus other income
(expense). EBIT Margin is a non-GAAP measure defined as EBIT as a
percentage of net sales. 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 is useful to investors as these measures are
representative of the core operations of the segments and Company,
respectively.
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(Dollars in
millions)
|
(Unaudited)
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
Cash, cash
equivalents and restricted cash
|
$
|
120.3
|
|
|
$
|
125.4
|
|
Accounts receivable,
net
|
535.1
|
|
|
524.9
|
|
Contract
assets
|
111.4
|
|
|
—
|
|
Inventories,
net
|
776.8
|
|
|
738.9
|
|
Other current
assets
|
102.2
|
|
|
110.9
|
|
Total Current
Assets
|
1,645.8
|
|
|
1,500.1
|
|
Property, plant and
equipment, net
|
865.4
|
|
|
864.2
|
|
Goodwill and other
intangible assets
|
930.5
|
|
|
932.4
|
|
Non-current pension
assets
|
23.9
|
|
|
19.7
|
|
Other
assets
|
83.9
|
|
|
86.0
|
|
Total
Assets
|
$
|
3,549.5
|
|
|
$
|
3,402.4
|
|
LIABILITIES
|
|
|
|
Accounts
payable
|
$
|
266.6
|
|
|
$
|
265.2
|
|
Short-term debt,
including current portion of long-term debt
|
169.8
|
|
|
108.1
|
|
Income
taxes
|
12.2
|
|
|
9.8
|
|
Accrued
expenses
|
253.7
|
|
|
288.6
|
|
Total Current
Liabilities
|
702.3
|
|
|
671.7
|
|
Long-term
debt
|
896.5
|
|
|
854.2
|
|
Accrued pension
cost
|
168.5
|
|
|
167.3
|
|
Accrued
postretirement benefits cost
|
122.5
|
|
|
122.6
|
|
Other non-current
liabilities
|
116.9
|
|
|
111.7
|
|
Total
Liabilities
|
2,006.7
|
|
|
1,927.5
|
|
EQUITY
|
|
|
|
The Timken Company
shareholders' equity
|
1,510.9
|
|
|
1,442.7
|
|
Noncontrolling
Interest
|
31.9
|
|
|
32.2
|
|
Total
Equity
|
1,542.8
|
|
|
1,474.9
|
|
Total Liabilities and
Equity
|
$
|
3,549.5
|
|
|
$
|
3,402.4
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
(Dollars in
millions)
|
2018
|
2017
|
Cash Provided by
(Used in)
|
|
|
OPERATING
ACTIVITIES
|
|
|
Net income
attributable to The Timken Company
|
$
|
80.2
|
|
$
|
38.2
|
|
Net income (loss)
attributable to noncontrolling interest
|
0.3
|
|
(0.1)
|
|
Adjustments to
reconcile net income to net cash (used in) provided by operating
activities:
|
|
|
Depreciation
and amortization
|
35.8
|
|
32.9
|
|
Pension and
other postretirement expense
|
2.0
|
|
7.2
|
|
Pension and
other postretirement benefit contributions
|
(6.1)
|
|
(6.1)
|
|
Changes in
operating assets and liabilities:
|
|
|
Accounts
receivable
|
(72.1)
|
|
(50.3)
|
|
Contract
assets
|
(11.5)
|
|
—
|
|
Inventories
|
(53.8)
|
|
(6.5)
|
|
Accounts
payable
|
(2.3)
|
|
48.6
|
|
Accrued
expenses
|
(38.7)
|
|
(28.4)
|
|
Income
taxes
|
13.4
|
|
8.2
|
|
Other,
net
|
8.5
|
|
3.0
|
|
Net Cash (Used in)
Provided by Operating Activities
|
$
|
(44.3)
|
|
$
|
46.7
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
Capital
expenditures
|
$
|
(17.8)
|
|
$
|
(19.3)
|
|
Investments in
short-term marketable securities, net
|
3.7
|
|
(6.8)
|
|
Other, net
|
0.1
|
|
(0.8)
|
|
Net Cash Used in
Investing Activities
|
$
|
(14.0)
|
|
$
|
(26.9)
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
Cash dividends paid
to shareholders
|
$
|
(21.1)
|
|
$
|
(20.3)
|
|
Purchase of treasury
shares
|
(22.7)
|
|
(8.1)
|
|
Proceeds from
exercise of stock options
|
8.4
|
|
16.6
|
|
Shares surrendered
for taxes
|
(4.4)
|
|
(8.2)
|
|
Net proceeds
(payments) from credit facilities
|
93.6
|
|
(22.6)
|
|
Net payments from
long-term debt
|
(0.4)
|
|
(0.3)
|
|
Other, net
|
(1.1)
|
|
—
|
|
Net Cash Provided by
(Used in) Financing Activities
|
$
|
52.3
|
|
$
|
(42.9)
|
|
Effect of exchange
rate changes on cash
|
0.9
|
|
3.9
|
|
Decrease in Cash,
Cash Equivalents and Restricted Cash
|
$
|
(5.1)
|
|
$
|
(19.2)
|
|
Cash, Cash
Equivalents and Restricted Cash at Beginning of Period
|
125.4
|
|
151.6
|
|
Cash, Cash
Equivalents and Restricted Cash at End of Period
|
$
|
120.3
|
|
$
|
132.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
March 31,
|
|
|
2018
|
|
EPS
|
2017
|
|
EPS
|
Net Income
Attributable to The Timken Company
|
|
$
|
80.2
|
|
|
$
|
1.02
|
|
$
|
38.2
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
Adjustments:
(1)
|
|
|
|
|
|
|
|
Impairment, restructuring and
reorganization charges (2)
|
|
$
|
0.7
|
|
|
|
$
|
4.6
|
|
|
|
Acquisition related charges
|
|
—
|
|
|
|
0.1
|
|
|
|
Pension
related charges (3)
|
|
0.2
|
|
|
|
4.4
|
|
|
|
Tax
indemnification
|
|
0.3
|
|
|
|
—
|
|
|
|
Provision
for income taxes (4)
|
|
(1.4)
|
|
|
|
(3.6)
|
|
|
|
Total
Adjustments:
|
|
(0.2)
|
|
|
(0.01)
|
|
5.5
|
|
|
0.07
|
|
Adjusted Net Income
from The Timken Company
|
|
$
|
80.0
|
|
|
$
|
1.01
|
|
$
|
43.7
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
(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; and (iii)
severance related to cost reduction initiatives. The Company
re-assesses its operating footprint and makes adjustments as needed
that result in restructuring charges. However, management
believes these actions are not representative of the Company's core
operations.
|
|
|
|
|
|
|
|
|
(3)
Pension related charges during the first quarter of 2017 represent
actuarial losses that resulted from the remeasurement of pension
plan assets and obligations as a result of changes in assumptions.
The Company recognizes actuarial (gains) and losses through
earnings in connection with the annual remeasurement in the fourth
quarter, or on an interim basis if specific events trigger a
remeasurement.
|
|
(4)
Provision for income taxes includes the net tax
impact on pre-tax adjustments, the impact of discrete tax items
recorded during the respective periods, as well as adjustments to
reflect the use of one overall effective tax rate on adjusted
pre-tax income in interim periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
EBIT to GAAP Net Income, and EBIT Margin, After Adjustments, to Net
Income as a Percentage of Sales and EBIT, 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 and
taxes (EBIT) 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 EBIT.
Management also believes that non-GAAP measures of adjusted EBIT
and adjusted EBIT 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
March 31,
|
|
2018
|
Percentage to
Net Sales
|
2017
|
Percentage
to
Net Sales
|
Net Income
|
$
|
80.5
|
|
9.1
|
%
|
$
|
38.1
|
|
5.4
|
%
|
|
|
|
|
|
Provision for income
taxes
|
28.3
|
|
3.2
|
%
|
15.5
|
|
2.2
|
%
|
Interest
expense
|
10.0
|
|
1.1
|
%
|
7.9
|
|
1.1
|
%
|
Interest
income
|
(0.4)
|
|
—
|
%
|
(0.6)
|
|
—
|
%
|
Consolidated
EBIT
|
$
|
118.4
|
|
13.4
|
%
|
$
|
60.9
|
|
8.7
|
%
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Impairment, restructuring and
reorganization charges (1)
|
$
|
0.7
|
|
0.1
|
%
|
$
|
4.6
|
|
0.6
|
%
|
Acquisition related charges
|
—
|
|
—
|
%
|
0.1
|
|
—
|
%
|
Pension
related charges (2)
|
0.2
|
|
—
|
%
|
4.4
|
|
0.6
|
%
|
Tax
indemnification
|
0.3
|
|
—
|
%
|
—
|
|
—
|
%
|
Total Adjustments
|
1.2
|
|
0.1
|
%
|
9.1
|
|
1.2
|
%
|
Adjusted
EBIT
|
$
|
119.6
|
|
13.5
|
%
|
$
|
70.0
|
|
9.9
|
%
|
|
|
|
|
|
(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; and (iii)
severance related to cost reduction initiatives. The Company
re-assesses its operating footprint and makes adjustments as needed
that result in restructuring charges. However, management
believes these actions are not representative of the Company's core
operations.
|
|
|
|
|
|
(2)
Pension related charges during the first quarter of 2017 represent
actuarial losses that resulted from the remeasurement of pension
plan assets and obligations as a result of changes in assumptions.
The Company recognizes actuarial (gains) and losses through
earnings in connection with the annual remeasurement in the fourth
quarter, or on an interim basis if specific events trigger a
remeasurement.
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
segment EBIT Margin, After Adjustments, to segment EBIT as a
Percentage of Sales and segment EBIT, After Adjustments, to segment
EBIT:
|
(Unaudited)
|
|
|
|
|
The following
reconciliation is provided as additional relevant information about
the Company's Mobile Industries and Process Industries segment
performance deemed useful to investors. Management believes that
non-GAAP measures of adjusted EBIT and adjusted EBIT 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.
|
|
|
|
|
|
Mobile
Industries
|
|
|
|
|
(Dollars in
millions)
|
Three Months
Ended
March 31, 2018
|
Percentage to Net
Sales
|
Three Months
Ended
March 31, 2017
|
Percentage to Net
Sales
|
Earnings before
interest and taxes (EBIT)
|
$
|
51.1
|
|
10.5
|
%
|
$
|
32.6
|
|
8.5
|
%
|
Impairment, restructuring and
reorganization charges (1)
|
0.7
|
|
0.1
|
%
|
4.0
|
|
1.1
|
%
|
Adjusted
EBIT
|
$
|
51.8
|
|
10.6
|
%
|
$
|
36.6
|
|
9.6
|
%
|
|
|
|
|
|
Process
Industries
|
|
|
|
|
(Dollars in
millions)
|
Three Months
Ended
March 31, 2018
|
Percentage to Net
Sales
|
Three Months
Ended
March 31, 2017
|
Percentage to Net
Sales
|
Earnings before
interest and taxes (EBIT)
|
$
|
81.6
|
|
20.7
|
%
|
$
|
44.1
|
|
13.7
|
%
|
Acquisition related charges
|
—
|
|
—
|
%
|
0.1
|
|
0.1
|
%
|
Adjusted
EBIT
|
$
|
81.6
|
|
20.7
|
%
|
$
|
44.2
|
|
13.8
|
%
|
|
|
|
|
|
(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; and (iii)
severance related to cost reduction initiatives. The Company
re-assesses its operating footprint and makes adjustments as needed
that result in restructuring charges. However, management
believes these actions are not representative of the Company's core
operations.
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Total Debt to Net Debt and the Ratio of Net Debt to Capital to the
Ratio of Total Debt to Capital:
|
(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 total debt to capital, is a non-GAAP measure defined
as total debt plus total shareholders' equity. Capital, used for
the ratio of net debt to capital, is a non-GAAP measure defined as
total debt less cash, cash equivalents and restricted cash plus
total shareholders' equity. Management believes Net Debt and the
Ratio of Net Debt to Capital are important measures of the
Company's financial position, due to the amount of cash and cash
equivalents on hand.
|
|
|
|
(Dollars in
millions)
|
|
|
|
March 31,
2018
|
December 31,
2017
|
Short-term debt,
including current portion of long-term debt
|
$
|
169.8
|
|
$
|
108.1
|
|
Long-term
debt
|
896.5
|
|
854.2
|
|
Total
Debt
|
$
|
1,066.3
|
|
$
|
962.3
|
|
Less: Cash, cash
equivalents and restricted cash
|
(120.3)
|
|
(125.4)
|
|
Net Debt
|
$
|
946.0
|
|
$
|
836.9
|
|
|
|
|
Total
Equity
|
$
|
1,542.8
|
|
$
|
1,474.9
|
|
|
|
|
Ratio of Total Debt
to Capital
|
40.9
|
%
|
39.5
|
%
|
Ratio of Net Debt to
Capital
|
38.0
|
%
|
36.2
|
%
|
|
|
|
Reconciliation of
Free Cash Flow to GAAP Net Cash (Used in) 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
March 31,
|
|
2018
|
2017
|
Net cash (used in)
provided by operating activities
|
$
|
(44.3)
|
|
$
|
46.7
|
|
Less: capital
expenditures
|
(17.8)
|
|
(19.3)
|
|
Free cash
flow
|
$
|
(62.1)
|
|
$
|
27.4
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Earnings per Share to GAAP Earnings per Share for Full
Year 2018 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
Per Share
|
|
High End
Earnings
Per Share
|
Forecasted full year
GAAP diluted earnings per share
|
$
|
3.80
|
|
|
$
|
3.90
|
|
|
|
|
|
Forecasted
Adjustments:
|
|
|
|
Restructuring and other special items,
net (1)
|
0.10
|
|
|
0.10
|
|
Total
Adjustments:
|
$
|
0.10
|
|
|
$
|
0.10
|
|
Forecasted full year
adjusted diluted earnings per share
|
$
|
3.90
|
|
|
$
|
4.00
|
|
|
|
|
|
(1) Restructuring and other special
items, net do not include the impact of any potential
mark-to-market pension and other postretirement remeasurement
adjustment, because the amount will not be known until
incurred.
|
|
|
|
|
|
|
|
|
Reconciliation of
Free Cash Flow to GAAP Net Cash Provided by Operating Activities
for Full Year 2018 Outlook:
|
(Unaudited)
|
|
|
|
Forecasted full year
free cash flow is a non-GAAP measure that is useful to investors
because it is representative of the Company's expectation of cash
that will be generated from operating activities and available for
the execution of its business strategy.
|
(Dollars in
Millions)
|
|
|
Free Cash Flow
Outlook
|
Net cash provided by
operating activities
|
|
|
$
|
370.0
|
|
Less: capital
expenditures
|
|
|
(120.0)
|
|
Free cash
flow
|
|
|
$
|
250.0
|
|
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SOURCE The Timken Company