NORTH CANTON, Ohio,
Feb. 3, 2022 /PRNewswire/
-- The Timken Company (NYSE: TKR; www.timken.com), a
global industrial leader in engineered bearings and power
transmission products, today reported fourth-quarter 2021
sales of $1.01 billion, up 13 percent from the same
period a year ago, and over 10 percent higher than the previous
record fourth quarter. The increase was primarily driven by strong
organic growth across most end-market sectors led by industrial
distribution and off-highway, and the impact of higher pricing.
Timken posted net income of $62.9 million or
$0.82 per diluted share in the
fourth quarter, versus net income of $53.1 million
or $0.69 per diluted share for the same period a year
ago. The increase in GAAP net income was primarily driven by the
impact of higher volume, positive price/mix and the net favorable
impact of special items (detailed in the attached tables),
partially offset by significantly higher operating costs, as
compared to the year-ago period.
Excluding special items, adjusted net income in the fourth
quarter was $59.6 million or
$0.78 per diluted share, versus
adjusted net income of $65.0 million or $0.84 per diluted
share for the same period in 2020.
Net cash from operations for the fourth quarter was $102.8 million, and free cash flow was
$58.1 million. During the quarter,
Timken returned $59.1 million of cash
to shareholders with the payment of its 398th consecutive quarterly
dividend and the repurchase of 500 thousand shares of company
stock.
"Timken delivered record 2021 revenue and earnings per share
despite widespread supply chain issues and rapid inflation,
particularly in materials and logistics," said Richard G. Kyle, Timken president and chief
executive officer. "We posted strong revenue growth in the fourth
quarter as we responded well to the robust demand, but unfavorable
price-cost continued to impact our profitability. Our pricing and
cost mitigation efforts are progressing, and we will achieve a
step-up in price realization in 2022."
2021 Full-Year Results and Highlights
For 2021, sales were $4.1 billion,
up 17.6 percent compared with 2020. The increase was primarily
driven by organic growth across most end-market sectors and the
favorable impact of currency.
Net income was $369.1 million or a
record $4.79 per diluted share for
the year, compared with net income of $284.5
million or $3.72 per diluted
share a year ago. The year-over-year increase reflects the impact
of higher volume, favorable currency, positive price/mix, and the
net favorable impact of special items (detailed in the attached
tables), partially offset by significantly higher operating
costs.
Excluding special items, adjusted net income was $363.4 million or a record $4.72 per diluted share in 2021. This compares
with adjusted net income of $313.1
million or adjusted earnings of $4.10 per diluted share in 2020.
Net cash from operations for the full year was $387.3 million, and free cash flow was
$239.0 million. Timken ended the
fourth quarter with a strong balance sheet; financial leverage as
measured by net debt to adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) was 1.7 times as of
December 31, 2021 compared to 1.9
times at the end of 2020.
During the year, Timken continued to invest in operational
excellence initiatives and grow its presence in attractive market
sectors. The company made additional capital investments in the
renewable energy and marine sectors, expanded its linear motion
portfolio with the acquisition of Intelligent Machine Solutions
(iMS) and continued to improve its global manufacturing footprint.
Additionally, Timken paid dividends totaling $1.19 per share in 2021, which represents its
eighth consecutive year of higher annual dividends, and repurchased
1.25 million shares of company stock. Between dividends and share
repurchases, the company returned a total of $185.2 million of cash to shareholders in
2021.
Fourth-Quarter 2021 Segment Results
Process Industries sales of $527.6 million
increased 15.2 percent from the same period a year ago. The
increase was driven primarily by organic growth across most sectors
led by distribution and general industrial.
EBITDA for the quarter was $104.4 million
or 19.8 percent of sales, compared with EBITDA
of $99.9 million or 21.8 percent of sales for
the same period a year ago. The increase in EBITDA was driven
primarily by the favorable impact of higher volume and price/mix,
partially offset by significantly higher operating costs.
Excluding special items (detailed in the attached tables),
adjusted EBITDA in the quarter was $105.3 million
or 20.0 percent of sales, compared
with $102.4 million or 22.4 percent of sales in the
fourth quarter last year.
Mobile Industries sales of $479.7 million increased
10.6 percent compared with the same period a year ago. The increase
was driven by higher shipments in most end-market sectors, with
off-highway posting the strongest gains, and the impact of higher
pricing.
EBITDA for the quarter was $40.0 million
or 8.3 percent of sales, compared with EBITDA
of $54.6 million or 12.6 percent of sales for the
same period a year ago. The decline in EBITDA reflects the impact
of significantly higher operating costs, partially offset by the
favorable impact of higher volume and positive price/mix.
Excluding special items (detailed in the attached tables),
adjusted EBITDA in the quarter was $41.3 million
or 8.6 percent of sales, compared
with $53.9 million or 12.4 percent of sales in the
fourth quarter last year.
2022 Outlook
Timken is currently planning for 2022 revenue to be up
approximately 10 percent in total versus 2021. The company is
setting an initial outlook for earnings per diluted share in the
range of $4.85 to $5.25 for the full year on a GAAP basis.
Excluding special items (detailed in the attached tables), the
company estimates that 2022 adjusted earnings per diluted share
will be in the range of $5.00 to
$5.40.
"We anticipate strong revenue and earnings growth in 2022,
driven by continued robust industrial demand, price realization and
our outgrowth initiatives," said Kyle. "The operating environment
remains dynamic, with a higher degree of uncertainty than normal.
We're planning for the supply chain challenges and inflationary
pressures we experienced in the second half of 2021 to largely
persist through 2022; however, we expect our pricing and efficiency
improvements to have a much greater impact on results. Timken is
well-positioned to deliver record revenue and earnings again in
2022, and we remain focused on serving customers, driving our
profitable growth strategy and advancing as a global industrial
leader."
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:
|
Thursday, February 3,
2022
|
|
11:00 a.m. Eastern
Time
|
|
Live Dial-In:
888-204-4368
|
|
Or +1
313-209-4906
|
|
(Call in 10 minutes
prior to be included.)
|
|
Conference ID:
Timken's 4Q Earnings Call
|
|
Or Click to Join:
https://tmkn.biz/3HQYtpj
|
|
|
Conference Call
Replay:
|
Replay Dial-In
available through
|
|
February 17,
2022:
|
|
888-203-1112 or
719-457-0820
|
|
Replay Passcode:
7571016
|
|
|
Live
Webcast:
|
http://investors.timken.com
|
About The Timken Company
The Timken Company (NYSE: TKR; www.timken.com) designs
a growing portfolio of engineered bearings and power transmission
products. With more than a century of knowledge and innovation, we
continuously improve the reliability and efficiency of global
machinery and equipment to move the world forward. Timken
posted $4.1 billion in sales in 2021
and employs more than 18,000 people globally, operating from 42
countries. Timken is recognized among America's Most Responsible
Companies by Newsweek, the World's Most Ethical Companies® by
Ethisphere and America's Best Employers, America's Best Employers
for New Graduates and America's Best Employers for Women by
Forbes.
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
"2022 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 fourth
quarter and full year of 2021; 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; fluctuations in material and energy costs;
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 and sanctions;
weakness in global or regional economic conditions and capital
markets; 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; 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; the impact on operations of general
economic conditions; fluctuations in customer demand; 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 and commercial requirements meant to address climate
change; unanticipated litigation, claims, investigations or
assessments; the company's ability to maintain positive relations
with unions and works councils; the company's ability to compete
for skilled labor; negative impacts to the company's business,
results of operations, financial position or liquidity as a result
of COVID-19 or other epidemics and associated governmental measures
such as restrictions on travel and manufacturing operations; 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, 2020, 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
neil.frohnapple@timken.com
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Timken
Company
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
(Dollars in
millions, except share data) (Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2021
|
2020
|
|
2021
|
2020
|
Net sales
|
$
|
1,007.3
|
|
$
|
891.7
|
|
|
$
|
4,132.9
|
|
$
|
3,513.2
|
|
Cost of products
sold
|
774.2
|
|
654.7
|
|
|
3,030.4
|
|
2,503.3
|
|
Gross
Profit
|
233.1
|
|
237.0
|
|
|
1,102.5
|
|
1,009.9
|
|
Selling, general
& administrative expenses
|
146.3
|
|
135.7
|
|
|
580.5
|
|
533.8
|
|
Impairment and
restructuring charges
|
0.7
|
|
2.5
|
|
|
8.9
|
|
21.2
|
|
Operating
Income
|
86.1
|
|
98.8
|
|
|
513.1
|
|
454.9
|
|
Non-service pension
and other postretirement income (expense)
|
12.4
|
|
(18.1)
|
|
|
18.3
|
|
(4.7)
|
|
Other income
(expense), net
|
1.4
|
|
(2.2)
|
|
|
0.8
|
|
(1.1)
|
|
Acquisition-related
gain
|
—
|
|
11.1
|
|
|
0.9
|
|
11.1
|
|
Interest expense,
net
|
(13.2)
|
|
(14.6)
|
|
|
(56.5)
|
|
(63.9)
|
|
Income Before
Income Taxes
|
86.7
|
|
75.0
|
|
|
476.6
|
|
396.3
|
|
Provision for income
taxes
|
20.0
|
|
19.7
|
|
|
95.1
|
|
103.9
|
|
Net
Income
|
66.7
|
|
55.3
|
|
|
381.5
|
|
292.4
|
|
Less: Net income
attributable to noncontrolling interest
|
3.8
|
|
2.2
|
|
|
12.4
|
|
7.9
|
|
Net Income
Attributable to The Timken Company
|
$
|
62.9
|
|
$
|
53.1
|
|
|
$
|
369.1
|
|
$
|
284.5
|
|
Net Income per
Common Share Attributable to The Timken Company Common
Shareholders
|
|
|
|
|
|
Basic Earnings per
share
|
$
|
0.83
|
|
$
|
0.70
|
|
|
$
|
4.86
|
|
$
|
3.78
|
|
Diluted Earnings per
share
|
$
|
0.82
|
|
$
|
0.69
|
|
|
$
|
4.79
|
|
$
|
3.72
|
|
Average Shares
Outstanding
|
75,641,174
|
|
75,518,839
|
|
|
75,885,316
|
|
75,354,280
|
|
Average Shares
Outstanding - assuming dilution
|
76,594,491
|
|
77,177,124
|
|
|
77,006,589
|
|
76,401,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BUSINESS
SEGMENTS
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
December 31,
|
Twelve Months
Ended
December 31,
|
(Dollars in
millions)
|
2021
|
2020
|
2021
|
2020
|
Mobile
Industries
|
|
|
|
|
Net sales
|
$
|
479.7
|
|
$
|
433.7
|
|
$
|
1,965.7
|
|
$
|
1,671.6
|
|
Earnings before
interest, taxes, depreciation and amortization (EBITDA)
(1)
|
$
|
40.0
|
|
$
|
54.6
|
|
$
|
240.1
|
|
$
|
232.5
|
|
EBITDA Margin
(1)
|
8.3
|
%
|
12.6
|
%
|
12.2
|
%
|
13.9
|
%
|
Process
Industries
|
|
|
|
|
Net sales
|
$
|
527.6
|
|
$
|
458.0
|
|
$
|
2,167.2
|
|
$
|
1,841.6
|
|
Earnings before
interest, taxes, depreciation and amortization (EBITDA)
(1)
|
$
|
104.4
|
|
$
|
99.9
|
|
$
|
506.3
|
|
$
|
442.9
|
|
EBITDA Margin
(1)
|
19.8
|
%
|
21.8
|
%
|
23.4
|
%
|
24.0
|
%
|
Unallocated corporate
expense
|
$
|
(11.2)
|
|
$
|
(12.5)
|
|
$
|
(46.1)
|
|
$
|
(40.7)
|
|
Corporate pension and
other postretirement benefit related income (expense)
(2)
|
8.0
|
|
(21.6)
|
|
(0.3)
|
|
(18.5)
|
|
Acquisition-related
gain (3)
|
—
|
|
11.1
|
|
0.9
|
|
11.1
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
Net sales
|
$
|
1,007.3
|
|
$
|
891.7
|
|
$
|
4,132.9
|
|
$
|
3,513.2
|
|
Earnings before
interest, taxes, depreciation and amortization (EBITDA)
(1)
|
$
|
141.2
|
|
$
|
131.5
|
|
$
|
700.9
|
|
$
|
627.3
|
|
EBITDA Margin
(1)
|
14.0
|
%
|
14.7
|
%
|
17.0
|
%
|
17.9
|
%
|
|
|
|
|
|
(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
(expense) primarily represents actuarial gains and (losses) 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) The
acquisition-related gain represents a bargain purchase price gain
on the acquisition of the assets of Aurora Bearing Company
("Aurora") that closed on November 30, 2020.
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(Dollars in
millions)
|
(Unaudited)
|
|
|
|
December 31,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
257.1
|
|
|
$
|
320.3
|
|
Restricted
cash
|
0.8
|
|
|
0.8
|
|
Accounts receivable,
net
|
626.4
|
|
|
581.1
|
|
Unbilled
receivables
|
104.5
|
|
|
110.9
|
|
Inventories,
net
|
1,042.7
|
|
|
841.3
|
|
Other current
assets
|
182.0
|
|
|
145.9
|
|
Total Current
Assets
|
2,213.5
|
|
|
2,000.3
|
|
Property, plant and
equipment, net
|
1,055.3
|
|
|
1,035.6
|
|
Operating lease
assets
|
118.9
|
|
|
118.2
|
|
Goodwill and other
intangible assets
|
1,691.5
|
|
|
1,789.0
|
|
Other
assets
|
91.5
|
|
|
98.5
|
|
Total
Assets
|
$
|
5,170.7
|
|
|
$
|
5,041.6
|
|
LIABILITIES
|
|
|
|
Accounts
payable
|
$
|
430.0
|
|
|
$
|
351.4
|
|
Short-term debt,
including current portion of long-term debt
|
53.8
|
|
|
130.7
|
|
Income
taxes
|
26.2
|
|
|
16.1
|
|
Accrued
expenses
|
386.6
|
|
|
349.8
|
|
Total Current
Liabilities
|
896.6
|
|
|
848.0
|
|
Long-term
debt
|
1,411.1
|
|
|
1,433.9
|
|
Accrued pension
benefits
|
155.6
|
|
|
163.0
|
|
Accrued
postretirement benefits
|
45.8
|
|
|
41.3
|
|
Long-term operating
lease liabilities
|
77.6
|
|
|
75.5
|
|
Other non-current
liabilities
|
206.3
|
|
|
254.7
|
|
Total
Liabilities
|
2,793.0
|
|
|
2,816.4
|
|
EQUITY
|
|
|
|
The Timken Company
shareholders' equity
|
2,294.9
|
|
|
2,152.9
|
|
Noncontrolling
interest
|
82.8
|
|
|
72.3
|
|
Total
Equity
|
2,377.7
|
|
|
2,225.2
|
|
Total Liabilities and
Equity
|
$
|
5,170.7
|
|
|
$
|
5,041.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(Dollars in
millions)
|
2021
|
2020
|
|
2021
|
2020
|
Cash Provided by
(Used in)
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
Net Income
|
$
|
66.7
|
|
$
|
55.3
|
|
|
$
|
381.5
|
|
$
|
292.4
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
41.3
|
|
41.9
|
|
|
167.8
|
|
167.1
|
|
Stock-based
compensation expense
|
4.6
|
|
4.0
|
|
|
20.2
|
|
23.2
|
|
Pension and other
postretirement benefit (income) expense
|
(9.5)
|
|
21.3
|
|
|
(6.6)
|
|
17.4
|
|
Pension and other
postretirement benefit contributions and payments
|
(6.3)
|
|
(7.7)
|
|
|
(24.5)
|
|
(20.6)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
71.8
|
|
7.0
|
|
|
(55.8)
|
|
(20.7)
|
|
Unbilled
receivables
|
(18.9)
|
|
30.4
|
|
|
6.2
|
|
18.5
|
|
Inventories
|
(71.6)
|
|
(20.5)
|
|
|
(215.8)
|
|
27.4
|
|
Accounts
payable
|
16.2
|
|
19.8
|
|
|
76.7
|
|
22.6
|
|
Accrued
expenses
|
5.0
|
|
5.7
|
|
|
55.2
|
|
55.1
|
|
Income
taxes
|
0.1
|
|
(20.4)
|
|
|
(6.6)
|
|
(14.7)
|
|
Other, net
|
3.4
|
|
(16.3)
|
|
|
(11.0)
|
|
9.9
|
|
Net Cash Provided by
Operating Activities
|
$
|
102.8
|
|
$
|
120.5
|
|
|
$
|
387.3
|
|
$
|
577.6
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Capital
expenditures
|
$
|
(44.7)
|
|
$
|
(35.9)
|
|
|
$
|
(148.3)
|
|
$
|
(121.6)
|
|
Acquisitions, net of
cash received
|
(0.3)
|
|
(17.3)
|
|
|
(7.5)
|
|
(24.0)
|
|
Investments in
short-term marketable securities, net
|
(12.6)
|
|
1.0
|
|
|
(18.0)
|
|
(9.4)
|
|
Other, net
|
(0.4)
|
|
0.1
|
|
|
—
|
|
1.5
|
|
Net Cash Used in
Investing Activities
|
$
|
(57.9)
|
|
$
|
(52.1)
|
|
|
$
|
(173.8)
|
|
$
|
(153.5)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
Cash dividends paid
to shareholders
|
$
|
(22.7)
|
|
$
|
(22.0)
|
|
|
$
|
(92.2)
|
|
$
|
(87.0)
|
|
Purchase of treasury
shares
|
(36.4)
|
|
(7.0)
|
|
|
(93.0)
|
|
(49.3)
|
|
Proceeds from
exercise of stock options
|
0.6
|
|
19.2
|
|
|
26.0
|
|
37.4
|
|
Payments related to
tax withholding for stock-based compensation
|
(0.3)
|
|
(4.0)
|
|
|
(23.8)
|
|
(16.0)
|
|
Net proceeds
(payments) from credit facilities
|
14.8
|
|
(55.5)
|
|
|
(73.4)
|
|
(131.5)
|
|
Net payments on
long-term debt
|
(2.9)
|
|
(2.9)
|
|
|
(12.4)
|
|
(66.1)
|
|
Other, net
|
—
|
|
(1.2)
|
|
|
(0.5)
|
|
(18.6)
|
|
Net Cash Used in
Financing Activities
|
$
|
(46.9)
|
|
$
|
(73.4)
|
|
|
$
|
(269.3)
|
|
$
|
(331.1)
|
|
Effect of exchange
rate changes on cash
|
(2.7)
|
|
12.1
|
|
|
(7.4)
|
|
11.9
|
|
(Decrease) Increase
in Cash, Cash Equivalents and Restricted Cash
|
$
|
(4.7)
|
|
$
|
7.1
|
|
|
$
|
(63.2)
|
|
$
|
104.9
|
|
Cash, Cash
Equivalents and Restricted Cash at Beginning of Period
|
262.6
|
|
314.0
|
|
|
321.1
|
|
216.2
|
|
Cash, Cash
Equivalents and Restricted Cash at End of Period
|
$
|
257.9
|
|
$
|
321.1
|
|
|
$
|
257.9
|
|
$
|
321.1
|
|
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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2021
|
|
EPS
|
2020
|
|
EPS
|
|
2021
|
|
EPS
|
2020
|
|
EPS
|
Net Income
Attributable to The Timken Company
|
$
|
62.9
|
|
|
$
|
0.82
|
|
$
|
53.1
|
|
|
$
|
0.69
|
|
|
$
|
369.1
|
|
|
$
|
4.79
|
|
$
|
284.5
|
|
|
$
|
3.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment,
restructuring and reorganization charges (2)
|
$
|
1.8
|
|
|
|
$
|
4.1
|
|
|
|
|
$
|
15.1
|
|
|
|
$
|
29.0
|
|
|
|
Corporate
pension and other postretirement benefit related (income) expense
(3)
|
(8.0)
|
|
|
|
21.6
|
|
|
|
|
0.3
|
|
|
|
18.5
|
|
|
|
Acquisition-related charges
(4)
|
0.2
|
|
|
|
—
|
|
|
|
|
3.2
|
|
|
|
3.7
|
|
|
|
Acquisition-related gain
(5)
|
—
|
|
|
|
(11.1)
|
|
|
|
|
(0.9)
|
|
|
|
(11.1)
|
|
|
|
Property
recoveries and related expenses (6)
|
—
|
|
|
|
(1.7)
|
|
|
|
|
—
|
|
|
|
(5.5)
|
|
|
|
Other,
net
|
—
|
|
|
|
—
|
|
|
|
|
0.2
|
|
|
|
—
|
|
|
|
Provision for
income taxes (7)
|
2.7
|
|
|
|
(1.0)
|
|
|
|
|
(23.6)
|
|
|
|
(6.0)
|
|
|
|
Total
Adjustments:
|
(3.3)
|
|
|
(0.04)
|
|
11.9
|
|
|
0.15
|
|
|
(5.7)
|
|
|
(0.07)
|
|
28.6
|
|
|
0.38
|
|
Adjusted Net Income
Attributable to The Timken Company
|
$
|
59.6
|
|
|
$
|
0.78
|
|
$
|
65.0
|
|
|
$
|
0.84
|
|
|
$
|
363.4
|
|
|
$
|
4.72
|
|
$
|
313.1
|
|
|
$
|
4.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 and (iv) related
depreciation and amortization. The Company re-assesses its
operating footprint and cost structure periodically, 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)
Corporate pension and other postretirement benefit related (income)
expense represents actuarial (gains) and losses 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 and certain unsuccessful transactions, as
well as any resulting inventory step-up impact.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) The
acquisition-related gain represents a bargain purchase price gain
on the acquisition of the assets of Aurora that closed on November
30, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
Represents property loss and related expenses during the period
presented (net of insurance recoveries received in 2020) resulting
from property loss that occurred during the first quarter of 2019
at one of the Company's warehouses in Knoxville, Tennessee and
during the third quarter of 2019 at one of the Company's warehouses
in Yantai, China.
|
|
(7)
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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2021
|
Percentage
to
Net Sales
|
2020
|
Percentage
to
Net Sales
|
|
2021
|
Percentage
to
Net Sales
|
2020
|
Percentage
to
Net Sales
|
Net Income
|
$
|
66.7
|
|
6.6
|
%
|
$
|
55.3
|
|
6.2
|
%
|
|
$
|
381.5
|
|
9.2
|
%
|
$
|
292.4
|
|
8.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
20.0
|
|
|
19.7
|
|
|
|
95.1
|
|
|
103.9
|
|
|
Interest
expense
|
13.8
|
|
|
15.3
|
|
|
|
58.8
|
|
|
67.6
|
|
|
Interest
income
|
(0.6)
|
|
|
(0.7)
|
|
|
|
(2.3)
|
|
|
(3.7)
|
|
|
Depreciation and
amortization
|
41.3
|
|
|
41.9
|
|
|
|
167.8
|
|
|
167.1
|
|
|
Consolidated
EBITDA
|
$
|
141.2
|
|
14.0
|
%
|
$
|
131.5
|
|
14.7
|
%
|
|
$
|
700.9
|
|
17.0
|
%
|
$
|
627.3
|
|
17.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Impairment,
restructuring and reorganization charges (1)
|
$
|
1.8
|
|
|
$
|
3.8
|
|
|
|
$
|
14.3
|
|
|
$
|
25.9
|
|
|
Corporate
pension and other postretirement benefit related
(income) expense
(2)
|
(8.0)
|
|
|
21.6
|
|
|
|
0.3
|
|
|
18.5
|
|
|
Acquisition-related charges (3)
|
0.2
|
|
|
—
|
|
|
|
3.2
|
|
|
3.7
|
|
|
Acquisition-related gain (4)
|
—
|
|
|
(11.1)
|
|
|
|
(0.9)
|
|
|
(11.1)
|
|
|
Property
recoveries and related expenses (5)
|
—
|
|
|
(1.7)
|
|
|
|
—
|
|
|
(5.5)
|
|
|
Other,
net
|
0.2
|
|
|
0.1
|
|
|
|
0.2
|
|
|
0.1
|
|
|
Total
Adjustments
|
(5.8)
|
|
(0.6)
|
%
|
12.7
|
|
1.5
|
%
|
|
17.1
|
|
0.4
|
%
|
31.6
|
|
0.9
|
%
|
Adjusted
EBITDA
|
$
|
135.4
|
|
13.4
|
%
|
$
|
144.2
|
|
16.2
|
%
|
|
$
|
718.0
|
|
17.4
|
%
|
$
|
658.9
|
|
18.8
|
%
|
|
(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 cost structure
periodically, 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)
Corporate pension and other postretirement benefit related (income)
expense represents actuarial (gains) and losses 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 and certain unsuccessful transactions, as
well as any resulting inventory step-up impact.
|
|
(4) The
acquisition-related gain represents a bargain purchase gain on the
acquisition of the assets of Aurora that closed on November 30,
2020.
|
|
(5)
Represents property loss and related expenses during the period
presented (net of insurance recoveries received in 2020) resulting
from property loss that occurred during the first quarter of 2019
at one of the Company's warehouses in Knoxville, Tennessee and
during the third quarter of 2019 at one of the Company's warehouses
in Yantai, China.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
segment EBITDA Margin, After Adjustments, to segment EBITDA as a
Percentage of Sales and segment EBITDA, After Adjustments, to
segment EBITDA:
|
(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 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.
|
|
|
|
|
|
|
|
|
|
|
Mobile
Industries
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(Dollars in
millions)
|
2021
|
Percentage
to
Net Sales
|
2020
|
Percentage
to
Net Sales
|
|
2021
|
Percentage
to
Net Sales
|
2020
|
Percentage
to
Net Sales
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA)
|
$
|
40.0
|
|
8.3
|
%
|
$
|
54.6
|
|
12.6
|
%
|
|
$
|
240.1
|
|
12.2
|
%
|
$
|
232.5
|
|
13.9
|
%
|
Impairment,
restructuring and reorganization charges (1)
|
1.0
|
|
|
1.1
|
|
|
|
7.3
|
|
|
11.3
|
|
|
Acquisition-related charges (2)
|
0.1
|
|
|
—
|
|
|
|
0.7
|
|
|
2.1
|
|
|
Property
recoveries and related expenses (3)
|
—
|
|
|
(1.7)
|
|
|
|
—
|
|
|
(5.5)
|
|
|
Other,
net
|
0.2
|
|
|
(0.1)
|
|
|
|
0.2
|
|
|
(0.1)
|
|
|
Adjusted
EBITDA
|
$
|
41.3
|
|
8.6
|
%
|
$
|
53.9
|
|
12.4
|
%
|
|
$
|
248.3
|
|
12.6
|
%
|
$
|
240.3
|
|
14.4
|
%
|
Process
Industries
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(Dollars in
millions)
|
2021
|
Percentage
to
Net Sales
|
2020
|
Percentage
to
Net Sales
|
|
2021
|
Percentage
to
Net Sales
|
2020
|
Percentage
to
Net Sales
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA)
|
$
|
104.4
|
|
19.8
|
%
|
$
|
99.9
|
|
21.8
|
%
|
|
$
|
506.3
|
|
23.4
|
%
|
$
|
442.9
|
|
24.0
|
%
|
Impairment,
restructuring and reorganization charges (1)
|
0.8
|
|
|
2.5
|
|
|
|
7.0
|
|
|
14.0
|
|
|
Acquisition-related charges (2)
|
0.1
|
|
|
—
|
|
|
|
0.6
|
|
|
1.0
|
|
|
Adjusted
EBITDA
|
$
|
105.3
|
|
20.0
|
%
|
$
|
102.4
|
|
22.4
|
%
|
|
$
|
513.9
|
|
23.7
|
%
|
$
|
457.9
|
|
24.9
|
%
|
|
|
|
|
|
|
|
|
|
|
(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 cost structure
periodically, 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) The
acquisition-related charges represent the inventory step-up
impact.
|
|
|
|
|
|
|
|
|
|
|
(3)
Represents property loss and related expenses during the period
presented (net of insurance recoveries received in 2020) resulting
from property loss that occurred during the first quarter of 2019
at one of the Company's warehouses in Knoxville, Tennessee and
during the third quarter of 2019 at one of the Company's warehouses
in Yantai, China.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 above), 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)
|
|
|
|
|
|
|
|
December 31,
2021
|
December 31,
2020
|
Short-term debt,
including current portion of long-term debt
|
|
|
$
|
53.8
|
|
$
|
130.7
|
|
Long-term
debt
|
|
|
1,411.1
|
|
1,433.9
|
|
Total
Debt
|
|
|
$
|
1,464.9
|
|
$
|
1,564.6
|
|
Less: Cash and cash
equivalents
|
|
|
(257.1)
|
|
(320.3)
|
|
Net Debt
|
|
|
$
|
1,207.8
|
|
$
|
1,244.3
|
|
|
|
|
|
|
Total
Equity
|
|
|
$
|
2,377.7
|
|
$
|
2,225.2
|
|
|
|
|
|
|
Ratio of Net Debt to
Capital
|
|
|
33.7
|
%
|
35.9
|
%
|
|
|
|
|
|
Adjusted EBITDA for
the Twelve Months Ended
|
|
|
$
|
718.0
|
|
$
|
658.9
|
|
|
|
|
|
|
Ratio of Net Debt to
Adjusted EBITDA
|
|
|
1.7
|
|
1.9
|
|
|
|
|
|
|
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
December 31,
|
Twelve Months
Ended
December 31,
|
|
2021
|
2020
|
2021
|
2020
|
Net cash provided by
operating activities
|
$
|
102.8
|
|
$
|
120.5
|
|
$
|
387.3
|
|
$
|
577.6
|
|
Less: capital
expenditures
|
(44.7)
|
|
(35.9)
|
|
(148.3)
|
|
(121.6)
|
|
Free cash
flow
|
$
|
58.1
|
|
$
|
84.6
|
|
$
|
239.0
|
|
$
|
456.0
|
|
Reconciliation of
Adjusted Earnings per Share to GAAP Earnings per Share for Full
Year 2022 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
|
$
|
4.85
|
|
|
$
|
5.25
|
|
|
Forecasted
Adjustments:
|
|
|
|
Restructuring and other special items,
net (1)
|
0.15
|
|
|
0.15
|
|
Total
Adjustments:
|
$
|
0.15
|
|
|
$
|
0.15
|
|
Forecasted full year
adjusted diluted earnings per share
|
$
|
5.00
|
|
|
$
|
5.40
|
|
|
(1)
Restructuring and other special items, net do not include the
impact of any potential 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