2021 Performance Highlights
Timken delivered record-setting performance
in 2021, despite the unprecedented supply chain challenges and inflationary pressures that accelerated during the year. The Company grew revenue and earnings significantly in 2021, with record revenue of $4.13 billion, an increase of
approximately 18% from 2020, net income increasing approximately 30% to $369 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increasing approximately 9% to $718 million1. We achieved record earnings per diluted share (EPS) of $4.79 and record adjusted EPS
of $4.721, up 29% and 15%, respectively, from 2020. We also delivered an adjusted return on invested capital (ROIC) of 11.0%1 in
2021, up from 9.9% last year. In addition, we generated net cash from operations of $387 million and free cash flow of $2391 million in 2021.
We achieved these results through the continued execution of our corporate strategy, which is delivering improved performance and higher returns through
the business cycle. Our strategy focuses on (1) driving organic growth and share gains in our core business by leading in product technology, innovation and service, (2) executing operational excellence initiatives across the enterprise to
enhance performance, and (3) deploying capital to drive optimal returns for our investors.
We have continued to create significant shareholder
value by delivering total shareholder returns (TSR) of 25.5%, 14.3%, and 12.1% over the past three-, five-, and ten-year periods, respectively. Our three-year and five-year TSR outpaced the median
of our 2021 compensation peer group and also exceeded the S&P 500 Industrials over these respective timeframes, while our ten-year TSR was just slightly below our peer median and the S&P 500
Industrials. The S&P 500 Industrials comprises those companies included in the S&P 500 index that are classified as members of the Global Industry Classification Standard (GICS) industrials sector.
In 2021, we deployed capital in a disciplined and balanced manner to strengthen our competitive position, create value for our shareholders and further
enhance our financial position. We allocated $148 million, or about 3.6% of our sales, to capital expenditures focused on growth and continuous improvement initiatives. We also paid out our 398th consecutive quarterly dividend, continuing one
of the longest continuous dividend streaks on the New York Stock Exchange (the NYSE) and increased our quarterly dividend to $0.30/share in the second quarter, making 2021 the eighth consecutive year of higher annual dividends. In
addition, we repurchased approximately 1.25 million shares of stock, or over 1.7% of our outstanding shares.
2021 also marked the release of
our third annual CSR report, which detailed our vision to build a more efficient and resilient world. The report highlights how we continue to advance our corporate social responsibility initiatives by promoting a culture of problem solvers with a
strong focus on sustainable products and practices across the Company, while maintaining a strong commitment to ethics.
See page 35 of the Proxy
Statement for more details on the Companys 2021 performance.
1 See Appendix A for reconciliations of adjusted EPS, adjusted EBITDA, free cash flow, and adjusted ROIC to their most directly comparable
GAAP financial measures. Free cash flow is defined as net cash from operations minus capital expenditures. Adjusted ROIC is defined as adjusted net operating profit after taxes (ANOPAT) divided by average invested capital. The
performance metrics discussed above are used for external reporting and may not correlate exactly to their corresponding compensation adjusted metrics due to slight differences in methodology (see pages 48 to 52 for more details on how the
compensation adjusted metrics are calculated).
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