- Record sales of $1.125
billion, up approximately 10 percent from last
year
- Record first-quarter earnings per diluted share of
$1.56 on a GAAP basis, with all-time
record quarterly adjusted EPS of $1.61
- Repurchased 1.5 million shares during the
quarter
- Maintains earnings outlook; expects 2022 GAAP earnings
per diluted share of $4.85-5.25, with
adjusted EPS of $5.00-5.40
NORTH
CANTON, Ohio, May 2, 2022
/PRNewswire/ -- The Timken Company (NYSE: TKR; www.timken.com), a
global industrial leader in engineered bearings and power
transmission products, today reported record first-quarter
2022 sales of $1.125 billion, up 9.7 percent from the
same period a year ago. The increase was primarily driven by growth
across most end-market sectors led by industrial distribution and
off-highway, and the impact of higher pricing, partially offset by
unfavorable currency.
Timken posted net income in the first quarter
of $118.2 million or a record $1.56 per diluted share. This compares to
net income of $113.3 million or $1.47 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 and
favorable price/mix, partially offset by higher operating costs and
the net unfavorable impact of special items (detailed in the
attached tables), as compared to the year-ago period.
Excluding special items, adjusted net income in the first
quarter was $121.7 million or
$1.61 per diluted share, a record for
any quarter. This compares to adjusted net income of $106.7 million or $1.38 per diluted share for the same period in
2021.
During the quarter, Timken returned $123.5 million of cash to shareholders with the
repurchase of 1.5 million shares of company stock, or approximately
2 percent of outstanding shares, and the payment of its 399th
consecutive quarterly dividend. The company ended the first quarter
with net debt to adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) at 1.8 times. Also, among
recent developments, the company announced an agreement to acquire
Spinea, a technology leader and manufacturer of highly engineered
cycloidal reduction gears and actuators, which strengthens Timken's
position in the high-growth robotics and automation space.
"We had an excellent start to the year, reporting record revenue
and earnings with strong margin performance," said Richard G. Kyle, Timken president and chief
executive officer. "Our first-quarter results reflect higher
customer demand for our differentiated products along with the
benefit of recent pricing actions. In addition, our team delivered
better operating performance in the quarter, as we improved
execution and customer service despite continued challenges across
our global supply chain. Our performance demonstrates the
resiliency of the company and builds on our track record of
delivering strong financial results through industrial cycles and
dynamic market conditions."
First-Quarter 2022 Segment Results
Process Industries sales of $584.2 million
increased 12.2 percent from the same period a year ago. The
increase was driven primarily by growth across most sectors led by
distribution and general industrial, and the impact of higher
pricing, partially offset by lower revenue in the renewable energy
sector and unfavorable currency.
EBITDA for the quarter was $155.6 million
or 26.6 percent of sales, compared with EBITDA
of $131 million or 25.1 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 higher operating costs.
Excluding special items (detailed in the attached tables),
adjusted EBITDA in the quarter was $158.1 million
or 27.1 percent of sales, compared
with $135.7 million or 26.0 percent of sales in the
first quarter last year.
Mobile Industries sales of $540.4 million
increased 7.1 percent compared with the same period a year ago. The
increase was driven primarily by higher shipments in the
off-highway and rail sectors, and the impact of higher pricing,
partially offset by unfavorable currency.
EBITDA for the quarter was $75.1 million
or 13.9 percent of sales, compared with EBITDA
of $79.6 million or 15.8 percent of sales for the
same period a year ago. The decline in EBITDA reflects the impact
of significantly higher operating costs and Russia-related charges (described in the
attached tables), partially offset by positive price/mix and the
favorable impact of higher volume.
Excluding special items (detailed in the attached tables),
adjusted EBITDA in the quarter was $79.2 million
or 14.7 percent of sales, compared
with $80.1 million or 15.9 percent of sales in the
first quarter last year.
2022 Outlook
Timken is maintaining its 2022 earnings outlook, with full-year
earnings per diluted share in the range of $4.85 to $5.25 on a
GAAP basis and adjusted earnings per diluted share in the range of
$5.00 to $5.40. The company has modestly adjusted its
revenue outlook and now anticipates 2022 revenue to be up
approximately 8 percent at the midpoint in total versus 2021, which
reflects the impact from suspending operations in Russia as well as an updated estimate for
unfavorable currency translation.
"We expect to deliver strong performance with double-digit
earnings growth in 2022 driven by robust demand for our products,
improved operational execution and price realization," said Kyle.
"The diversity of our product portfolio and market mix position us
well to continue capitalizing on strong industrial market demand.
And we expect to deliver another record year while further
increasing our industrial leadership position by advancing our
strategic growth and capital allocation initiatives."
Conference Call Information
Timken will host a conference call today at 10 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:
|
Monday, May 2,
2022
|
|
10:00 a.m. Eastern
Time
|
|
Live Dial-In:
800-458-4121
|
|
Or 313-209-6672
|
|
Call in 10 minutes
prior to be included.)
|
|
Conference ID: Timken's
Q1 Earnings Call
|
|
Or Click to Join:
https://tmkn.biz/37HiYYV
|
|
|
Conference Call
Replay:
|
Replay Dial-In
available through
|
|
May 16,
2022:
|
|
888-203-1112 or
719-457-0820
|
|
Replay Passcode:
2919020
|
|
|
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 first
quarter of 2022; 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, 2021,
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
March 31,
|
|
2022
|
2021
|
Net sales
|
$
|
1,124.6
|
|
$
|
1,025.4
|
|
Cost of products
sold
|
797.2
|
|
726.2
|
|
Gross
Profit
|
327.4
|
|
299.2
|
|
Selling, general &
administrative expenses
|
154.1
|
|
144.5
|
|
Impairment and
restructuring charges
|
1.0
|
|
4.0
|
|
Operating
Income
|
172.3
|
|
150.7
|
|
Non-service pension and
other postretirement income
|
1.3
|
|
4.0
|
|
Other income,
net
|
0.2
|
|
1.0
|
|
Interest expense,
net
|
(13.7)
|
|
(14.4)
|
|
Income Before Income
Taxes
|
160.1
|
|
141.3
|
|
Provision for income
taxes
|
38.2
|
|
25.3
|
|
Net
Income
|
121.9
|
|
116.0
|
|
Less: Net income
attributable to noncontrolling interest
|
3.7
|
|
2.7
|
|
Net Income
Attributable to The Timken Company
|
$
|
118.2
|
|
$
|
113.3
|
|
|
|
|
Net Income per
Common Share Attributable to The Timken Company Common
Shareholders
|
|
|
Basic Earnings per
share
|
$
|
1.58
|
|
$
|
1.49
|
|
Diluted Earnings per
share
|
$
|
1.56
|
|
$
|
1.47
|
|
|
|
|
Average Shares
Outstanding
|
74,782,153
|
|
75,820,157
|
|
Average Shares
Outstanding - assuming dilution
|
75,545,665
|
|
77,264,641
|
|
|
|
|
|
|
|
|
|
|
BUSINESS SEGMENTS
|
|
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
(Dollars in
millions)
|
2022
|
2021
|
Mobile Industries
|
|
|
Net sales
|
$
|
540.4
|
|
$
|
504.5
|
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA) (1)
|
$
|
75.1
|
|
$
|
79.6
|
|
EBITDA
Margin (1)
|
13.9
|
%
|
15.8
|
%
|
Process Industries
|
|
|
Net sales
|
$
|
584.2
|
|
$
|
520.9
|
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA) (1)
|
$
|
155.6
|
|
$
|
131.0
|
|
EBITDA
Margin (1)
|
26.6
|
%
|
25.1
|
%
|
Unallocated corporate
expense
|
$
|
(12.9)
|
|
$
|
(11.6)
|
|
Corporate pension and
other postretirement benefit related
expense (2)
|
(2.6)
|
|
(0.9)
|
|
Acquisition-related
gain (3)
|
—
|
|
0.6
|
|
|
|
|
Consolidated
|
|
|
Net sales
|
$
|
1,124.6
|
|
$
|
1,025.4
|
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA) (1)
|
$
|
215.2
|
|
$
|
198.7
|
|
EBITDA
Margin (1)
|
19.1
|
%
|
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 expense primarily represents
actuarial (losses) and gains 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.
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)
|
|
|
|
March 31,
2022
|
|
December 31,
2021
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
424.5
|
|
|
$
|
257.1
|
|
Restricted
cash
|
0.7
|
|
|
0.8
|
|
Accounts receivable,
net
|
743.9
|
|
|
626.4
|
|
Unbilled
receivables
|
88.5
|
|
|
104.5
|
|
Inventories,
net
|
1,112.6
|
|
|
1,042.7
|
|
Other current
assets
|
178.1
|
|
|
182.0
|
|
Total Current
Assets
|
2,548.3
|
|
|
2,213.5
|
|
Property, plant and
equipment, net
|
1,039.9
|
|
|
1,055.3
|
|
Operating lease
assets
|
116.7
|
|
|
118.9
|
|
Goodwill and other
intangible assets
|
1,659.0
|
|
|
1,691.5
|
|
Other assets
|
94.6
|
|
|
91.5
|
|
Total Assets
|
$
|
5,458.5
|
|
|
$
|
5,170.7
|
|
LIABILITIES
|
|
|
|
Accounts
payable
|
$
|
416.1
|
|
|
$
|
430.0
|
|
Short-term debt,
including current portion of long-term debt
|
41.0
|
|
|
53.8
|
|
Income taxes
|
30.0
|
|
|
26.2
|
|
Accrued
expenses
|
379.1
|
|
|
386.6
|
|
Total Current
Liabilities
|
866.2
|
|
|
896.6
|
|
Long-term
debt
|
1,747.2
|
|
|
1,411.1
|
|
Accrued pension
benefits
|
156.5
|
|
|
155.6
|
|
Accrued postretirement
benefits
|
45.3
|
|
|
45.8
|
|
Long-term operating
lease liabilities
|
76.5
|
|
|
77.6
|
|
Other non-current
liabilities
|
211.8
|
|
|
206.3
|
|
Total
Liabilities
|
3,103.5
|
|
|
2,793.0
|
|
EQUITY
|
|
|
|
The Timken Company
shareholders' equity
|
2,271.1
|
|
|
2,294.9
|
|
Noncontrolling
interest
|
83.9
|
|
|
82.8
|
|
Total Equity
|
2,355.0
|
|
|
2,377.7
|
|
Total Liabilities and
Equity
|
$
|
5,458.5
|
|
|
$
|
5,170.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
(Dollars in
millions)
|
2022
|
2021
|
Cash Provided by (Used
in)
|
|
|
OPERATING ACTIVITIES
|
|
|
Net Income
|
$
|
121.9
|
|
$
|
116.0
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
41.4
|
|
43.0
|
|
Stock-based
compensation expense
|
7.1
|
|
6.5
|
|
Pension and other
postretirement benefit expense (income)
|
1.0
|
|
(1.0)
|
|
Pension and other
postretirement benefit contributions and payments
|
(5.2)
|
|
(2.5)
|
|
Changes in operating
assets and liabilities:
|
|
|
Accounts
receivable
|
(118.2)
|
|
(138.9)
|
|
Unbilled
receivables
|
16.1
|
|
(2.5)
|
|
Inventories
|
(70.2)
|
|
(33.3)
|
|
Accounts
payable
|
7.7
|
|
19.9
|
|
Accrued
expenses
|
(19.5)
|
|
17.0
|
|
Income taxes
|
8.1
|
|
1.6
|
|
Other, net
|
8.6
|
|
5.9
|
|
Net Cash (Used in)
Provided by Operating Activities
|
$
|
(1.2)
|
|
$
|
31.7
|
|
INVESTING ACTIVITIES
|
|
|
Capital
expenditures
|
$
|
(34.3)
|
|
$
|
(29.4)
|
|
Investments in
short-term marketable securities, net
|
(0.8)
|
|
(9.9)
|
|
Other, net
|
0.1
|
|
(0.1)
|
|
Net Cash Used in
Investing Activities
|
$
|
(35.0)
|
|
$
|
(39.4)
|
|
FINANCING ACTIVITIES
|
|
|
Cash dividends paid to
shareholders
|
$
|
(23.5)
|
|
$
|
(23.8)
|
|
Purchase of treasury
shares
|
(100.0)
|
|
(26.3)
|
|
Proceeds from exercise
of stock options
|
1.4
|
|
14.1
|
|
Payments related to tax
withholding for stock-based compensation
|
(7.5)
|
|
(17.8)
|
|
Net (payments) proceeds
from credit facilities
|
(11.1)
|
|
49.7
|
|
Net proceeds (payments)
on long-term debt
|
341.6
|
|
(2.3)
|
|
Other, net
|
3.8
|
|
—
|
|
Net Cash Provided by
(Used in) Financing Activities
|
$
|
204.7
|
|
$
|
(6.4)
|
|
Effect of exchange rate
changes on cash
|
(1.2)
|
|
(3.9)
|
|
Increase (Decrease) in
Cash, Cash Equivalents and Restricted Cash
|
$
|
167.3
|
|
$
|
(18.0)
|
|
Cash, Cash Equivalents
and Restricted Cash at Beginning of Period
|
257.9
|
|
321.1
|
|
Cash, Cash Equivalents
and Restricted Cash at End of Period
|
$
|
425.2
|
|
$
|
303.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
March 31,
|
|
2022
|
|
EPS
|
2021
|
|
EPS
|
Net Income Attributable
to The Timken Company
|
$
|
118.2
|
|
|
$
|
1.56
|
|
$
|
113.3
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
Adjustments: (1)
|
|
|
|
|
|
|
Impairment, restructuring and reorganization charges
(2)
|
$
|
1.6
|
|
|
|
$
|
5.2
|
|
|
|
Corporate
pension and other postretirement benefit related
expense (3)
|
2.6
|
|
|
|
0.9
|
|
|
|
Acquisition-related charges (gain) (4)
|
1.1
|
|
|
|
(0.8)
|
|
|
|
Russia-related charges (5)
|
4.6
|
|
|
|
—
|
|
|
|
Noncontrolling interest of above adjustments
|
(1.3)
|
|
|
|
0.2
|
|
|
|
Provision
for income taxes (6)
|
(5.1)
|
|
|
|
(12.1)
|
|
|
|
Total
Adjustments:
|
3.5
|
|
|
0.05
|
|
(6.6)
|
|
|
(0.09)
|
|
Adjusted Net Income
Attributable to The Timken Company
|
$
|
121.7
|
|
|
$
|
1.61
|
|
$
|
106.7
|
|
|
$
|
1.38
|
|
|
|
|
|
|
|
|
(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 expense represents actuarial losses
and (gains) 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. 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
(gain) represent the contingent consideration related to the
acquisition of Intelligent Machine Solutions ("iMS") that closed on
August 20, 2021, and deal-related expenses associated with
completed and certain unsuccessful transactions, as well as any
resulting inventory step-up impact. In addition, the 2021
acquisition-related gain includes measurement period adjustments to
the bargain purchase gain on the acquisition of the assets of
Aurora that closed on November 30, 2020.
|
|
|
|
|
|
|
|
(5) Russia-related charges include
allowances or impairments recorded against certain trade
receivables, inventory and other assets to reflect the current
impact of Russia's invasion of Ukraine (and associated sanctions)
on the Company's operations. Refer to Russia Operations in
Management Discussion and Analysis within the Company's quarterly
report on Form 10-Q for additional information.
|
|
|
|
|
|
|
|
(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
March 31,
|
|
2022
|
Percentage to
Net Sales
|
2021
|
Percentage to
Net Sales
|
Net Income
|
$
|
121.9
|
|
10.8
|
%
|
$
|
116.0
|
|
11.3
|
%
|
|
|
|
|
|
Provision for income
taxes
|
38.2
|
|
|
25.3
|
|
|
Interest
expense
|
14.3
|
|
|
14.9
|
|
|
Interest
income
|
(0.6)
|
|
|
(0.5)
|
|
|
Depreciation and
amortization
|
41.4
|
|
|
43.0
|
|
|
Consolidated
EBITDA
|
$
|
215.2
|
|
19.1
|
%
|
$
|
198.7
|
|
19.4
|
%
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Impairment, restructuring and reorganization
charges (1)
|
$
|
1.6
|
|
|
$
|
4.9
|
|
|
Corporate pension and other postretirement benefit related
expense (2)
|
2.6
|
|
|
0.9
|
|
|
Acquisition-related charges
(gain) (3)
|
1.1
|
|
|
(0.8)
|
|
|
Russia-related charges (4)
|
4.6
|
|
|
—
|
|
|
Total Adjustments
|
9.9
|
|
0.9
|
%
|
5.0
|
|
0.5
|
%
|
Adjusted
EBITDA
|
$
|
225.1
|
|
20.0
|
%
|
$
|
203.7
|
|
19.9
|
%
|
|
|
|
|
|
(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) Corporate pension and other
postretirement benefit related expense represents actuarial losses
and (gains) 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. 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
(gain) represent the contingent consideration related to the
acquisition of iMS that closed on August 20, 2021, and deal-related
expenses associated with completed and certain unsuccessful
transactions, as well as any resulting inventory step-up impact. In
addition, the 2021 acquisition-related gain includes measurement
period adjustments to the bargain purchase gain on the acquisition
of the assets of Aurora that closed on November 30,
2020.
|
|
|
|
|
|
(4) Russia-related charges include
allowances or impairments recorded against certain trade
receivables, inventory and other assets to reflect the current
impact of Russia's invasion of Ukraine (and associated sanctions)
on the Company's operations. Refer to Russia Operations in
Management Discussion and Analysis within the Company's quarterly
report on Form 10-Q for additional information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
March 31,
|
(Dollars in millions)
|
2022
|
Percentage to Net Sales
|
2021
|
Percentage to Net
Sales
|
Earnings before
interest, taxes, depreciation and amortization (EBITDA)
|
$
|
75.1
|
|
13.9
|
%
|
$
|
79.6
|
|
15.8
|
%
|
Impairment, restructuring and reorganization
charges (1)
|
1.0
|
|
|
0.3
|
|
|
Acquisition-related charges (2)
|
—
|
|
|
0.2
|
|
|
Russia-related charges (3)
|
3.1
|
|
|
—
|
|
|
Adjusted
EBITDA
|
$
|
79.2
|
|
14.7
|
%
|
$
|
80.1
|
|
15.9
|
%
|
|
|
|
|
|
Process Industries
|
|
|
|
|
|
Three Months Ended
March 31,
|
(Dollars in millions)
|
2022
|
Percentage to Net Sales
|
2021
|
Percentage to Net
Sales
|
Earnings before
interest, taxes, depreciation and amortization (EBITDA)
|
$
|
155.6
|
|
26.6
|
%
|
$
|
131.0
|
|
25.1
|
%
|
Impairment, restructuring and reorganization
charges (1)
|
0.6
|
|
|
4.6
|
|
|
Acquisition-related charges (2)
|
0.4
|
|
|
0.1
|
|
|
Russia-related charges (3)
|
1.5
|
|
|
—
|
|
|
Adjusted
EBITDA
|
$
|
158.1
|
|
27.1
|
%
|
$
|
135.7
|
|
26.0
|
%
|
|
|
|
|
|
(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 contingent consideration related to the acquisition of
iMS that closed on August 20, 2021 and the inventory step-up impact
of the acquisitions.
|
|
|
|
|
|
(3) Russia-related charges include
allowances or impairments recorded against certain trade
receivables, inventory and other assets to reflect the current
impact of Russia's invasion of Ukraine (and associated sanctions)
on the Company's operations. Refer to Russia Operations in
Management Discussion and Analysis within the Company's quarterly
report on Form 10-Q for additional information.
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
March 31,
2022
|
December 31,
2021
|
Short-term debt,
including current portion of long-term debt
|
$
|
41.0
|
|
$
|
53.8
|
|
Long-term
debt
|
1,747.2
|
|
1,411.1
|
|
Total
Debt
|
$
|
1,788.2
|
|
$
|
1,464.9
|
|
Less: Cash and cash
equivalents
|
(424.5)
|
|
(257.1)
|
|
Net Debt
|
$
|
1,363.7
|
|
$
|
1,207.8
|
|
|
|
|
Total Equity
|
$
|
2,355.0
|
|
$
|
2,377.7
|
|
|
|
|
|
|
|
|
|
|
Ratio of Net Debt to
Capital
|
36.7
|
%
|
33.7
|
%
|
|
|
|
Adjusted EBITDA for the
Twelve Months Ended
|
$
|
739.4
|
|
$
|
718.0
|
|
|
|
|
Ratio of Net Debt to
Adjusted EBITDA
|
1.8
|
|
1.7
|
|
|
|
|
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
March 31,
|
|
2022
|
2021
|
Net cash (used in)
provided by operating activities
|
$
|
(1.2)
|
|
$
|
31.7
|
|
Less: capital
expenditures
|
(34.3)
|
|
(29.4)
|
|
Free cash
flow
|
$
|
(35.5)
|
|
$
|
2.3
|
|
|
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
March 31, 2022
|
Twelve Months Ended
December 31, 2021
|
Net Income
|
$
|
387.4
|
|
$
|
381.5
|
|
Provision for income
taxes
|
108.0
|
|
95.1
|
|
Interest
expense
|
58.2
|
|
58.8
|
|
Interest
income
|
(2.4)
|
|
(2.3)
|
|
Depreciation and
amortization
|
166.2
|
|
167.8
|
|
Consolidated
EBITDA
|
$
|
717.4
|
|
$
|
700.9
|
|
Adjustments:
|
|
|
Impairment,
restructuring and reorganization
charges (1)
|
$
|
11.0
|
|
$
|
14.3
|
|
Corporate
pension and other postretirement benefit related expense
(2)
|
2.0
|
|
0.3
|
|
Acquisition-related
charges (3)
|
4.2
|
|
2.3
|
|
Russia-related
charges (4)
|
4.6
|
|
—
|
|
Tax
indemnification and related items
|
0.2
|
|
0.2
|
|
Total Adjustments
|
22.0
|
|
17.1
|
|
Adjusted
EBITDA
|
$
|
739.4
|
|
$
|
718.0
|
|
|
|
|
(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 expense represents actuarial losses
and (gains) 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 contingent consideration related to the acquisition of
iMS that closed on August 20, 2021, and deal-related expenses
associated with completed and certain unsuccessful transactions, as
well as any resulting inventory step-up impact. Also included is
the acquisition-related gain related to measurement period
adjustments to the bargain purchase gain on the acquisition of the
assets of Aurora that closed on November 30, 2020.
|
|
|
|
(4) Russia-related charges include
allowances or impairments recorded against certain trade
receivables, inventory and other assets to reflect the current
impact of Russia's invasion of Ukraine (and associated sanctions)
on the Company's operations. Refer to Russia Operations in
Management Discussion and Analysis within the Company's quarterly
report on Form 10-Q for additional information.
|
|
|
|
|
|
|
|
|
|
|
|
|
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