- Record sales of $1.15
billion, up 11 percent organically from last
year
- Record second-quarter earnings per diluted share of
$1.42 on a GAAP basis, with all-time
record quarterly adjusted EPS of $1.67
- Raises earnings outlook; now expects 2022 GAAP earnings
per diluted share of $5.15 to
$5.45 and adjusted EPS of
$5.50 to $5.80
NORTH
CANTON, Ohio, July 28,
2022 /PRNewswire/ -- The Timken Company (NYSE: TKR;
www.timken.com), a global industrial leader in engineered bearings
and power transmission products, today reported record
second-quarter 2022 sales of $1.15 billion, up 8.5
percent from the same period a year ago. The increase was 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 foreign currency translation and
lower revenue in the renewable energy sector. Organically,
second-quarter sales were up 11 percent versus the prior year.
![The Timken Company Logo. (PRNewsFoto/The Timken Company) (PRNewsFoto/) (PRNewsFoto/) The Timken Company Logo. (PRNewsFoto/The Timken Company) (PRNewsFoto/) (PRNewsFoto/)](https://mma.prnewswire.com/media/333357/the_timken_company_logo.jpg)
Timken posted net income in the second quarter
of $105.0 million or a record $1.42 per diluted share. This compares to
net income of $104.8 million or $1.36 per diluted
share for the same period a year ago. The slight year-on-year
increase in net income reflects positive price/mix and the
favorable impact of higher volume, offset by higher operating
costs, a higher tax rate 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 second
quarter was $123.9 million or
$1.67 per diluted share, a record for
any quarter. This compares to adjusted net income of $106.1 million or $1.37 per diluted share for the same period in
2021.
Net cash from operations for the second quarter was $78.3 million, and free cash flow was
$37.4 million. During the quarter,
Timken repurchased 750 thousand shares of company stock. In
addition, the company raised its quarterly dividend by 3 percent to
$0.31 per share and paid its
400th consecutive quarterly dividend in June. Between
dividends and share repurchases, Timken returned a total of
$67.2 million of cash to shareholders
in the second quarter. The company also completed the previously
announced acquisition of Spinea on May 31,
2022, which bolsters Timken's position in the growing
automation sector. The company ended the second quarter with net
debt to adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) at 2.0 times.
"In the second quarter, Timken once again demonstrated the
strength and resiliency of our business, as we delivered
double-digit organic revenue growth, expanded operating margins and
achieved record earnings per share," said Richard G. Kyle, Timken president and chief
executive officer. "Timken's strong results reflect our team's
relentless efforts to meet the needs of our customers, offset the
impact of cost increases and execute the company's strategic
initiatives. Through our disciplined capital allocation and
investment in outgrowth initiatives, the business is well
positioned for continued success."
Second-Quarter 2022 Segment Results
Process Industries sales of $610.1 million
increased 7.3 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 unfavorable currency and lower revenue
in the renewable energy sector.
EBITDA for the quarter was $163.5 million
or 26.8 percent of sales, compared with EBITDA
of $141.2 million or 24.8 percent of sales for
the same period a year ago. The increase in EBITDA was driven
primarily by positive price/mix and the favorable impact of higher
volume, partially offset by higher operating costs.
Excluding special items (detailed in the attached tables),
adjusted EBITDA in the quarter was $164.5 million
or 27.0 percent of sales, compared
with $142.2 million or 25.0 percent of sales in the
second quarter last year.
Mobile Industries sales of $543.6 million
increased 10 percent compared with the same period a year ago. The
increase was driven primarily by higher shipments across most
sectors led by off-highway, and the impact of higher pricing,
partially offset by unfavorable currency.
EBITDA for the quarter was $69.1 million
or 12.7 percent of sales, compared with EBITDA
of $67.3 million or 13.6 percent of sales for the
same period a year ago. The increase in EBITDA reflects positive
price/mix and the favorable impact of higher volume, partially
offset by higher operating costs and Russia-related charges (described in the
attached tables).
Excluding special items (detailed in the attached tables),
adjusted EBITDA in the quarter was $79.5 million
or 14.6 percent of sales, compared
with $68.7 million or 13.9 percent of sales in the
second quarter last year.
2022 Outlook
Timken is increasing its 2022 earnings outlook, with full-year
earnings per diluted share now expected to be in the range of
$5.15 to $5.45 on a GAAP basis and adjusted earnings per
diluted share in the range of $5.50
to $5.80. The company has modestly
adjusted its revenue outlook and now anticipates 2022 revenue to be
up approximately 7 percent in total at the midpoint from 2021.
"Timken's strong market position and earnings power are
evidenced by our year-to-date results and increased full-year
outlook," said Kyle. "We remain on track to deliver record
sales and earnings for 2022 in this dynamic and inflationary
environment. We have a solid backlog and customer demand remains
healthy. In the second half, we will remain focused on delivering
best-in-class customer service, driving operational excellence
across the enterprise and executing our strategy to create enduring
value for shareholders."
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, July 28,
2022
|
|
11:00 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
Q2 Earnings Call
|
|
Or Click to Join:
https://tmkn.biz/3HU6ICa
|
|
|
Conference Call
Replay:
|
Replay Dial-In
available through
|
|
Aug. 11,
2022:
|
|
888-203-1112 or
719-457-0820
|
|
Replay Passcode:
5800166
|
|
|
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 43 countries. Timken
has been 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 second
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;
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 general 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; 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 operations or financial position as a result of COVID-19
or other epidemics and associated governmental measures; 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
Net sales
|
$
|
1,153.7
|
|
$
|
1,062.9
|
|
|
$
|
2,278.3
|
|
$
|
2,088.3
|
|
Cost of products
sold
|
811.9
|
|
760.6
|
|
|
1,609.1
|
|
1,486.8
|
|
Gross Profit
|
341.8
|
|
302.3
|
|
|
669.2
|
|
601.5
|
|
Selling, general &
administrative expenses
|
155.9
|
|
149.0
|
|
|
310.0
|
|
293.5
|
|
Impairment and
restructuring charges
|
10.0
|
|
1.3
|
|
|
11.0
|
|
5.3
|
|
Operating Income
|
175.9
|
|
152.0
|
|
|
348.2
|
|
302.7
|
|
Non-service pension and
other postretirement (expense) income
|
(7.9)
|
|
1.4
|
|
|
(6.6)
|
|
5.4
|
|
Other expense,
net
|
(1.1)
|
|
(2.2)
|
|
|
(0.9)
|
|
(1.2)
|
|
Interest expense,
net
|
(17.3)
|
|
(14.6)
|
|
|
(31.0)
|
|
(29.0)
|
|
Income Before Income Taxes
|
149.6
|
|
136.6
|
|
|
309.7
|
|
277.9
|
|
Provision for income
taxes
|
44.0
|
|
29.4
|
|
|
82.2
|
|
54.7
|
|
Net Income
|
105.6
|
|
107.2
|
|
|
227.5
|
|
223.2
|
|
Less: Net income
attributable to noncontrolling interest
|
0.6
|
|
2.4
|
|
|
4.3
|
|
5.1
|
|
Net Income Attributable to The Timken
Company
|
$
|
105.0
|
|
$
|
104.8
|
|
|
$
|
223.2
|
|
$
|
218.1
|
|
|
|
|
|
|
|
Net Income per Common Share Attributable to The
Timken Company Common Shareholders
|
|
|
|
|
|
Basic Earnings per
share
|
$
|
1.43
|
|
$
|
1.38
|
|
|
$
|
3.01
|
|
$
|
2.87
|
|
Diluted Earnings per
share
|
$
|
1.42
|
|
$
|
1.36
|
|
|
$
|
2.98
|
|
$
|
2.82
|
|
|
|
|
|
|
|
Average Shares Outstanding
|
73,660,410
|
|
76,122,257
|
|
|
74,234,300
|
|
75,969,569
|
|
Average Shares Outstanding - assuming
dilution
|
74,182,793
|
|
77,254,157
|
|
|
74,877,248
|
|
77,257,761
|
|
BUSINESS SEGMENTS
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
(Dollars in
millions)
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Mobile Industries
|
|
|
|
|
Net sales
|
$
|
543.6
|
|
$
|
494.2
|
|
$
|
1,084.0
|
|
$
|
998.7
|
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA) (1)
|
$
|
69.1
|
|
$
|
67.3
|
|
$
|
144.2
|
|
$
|
146.9
|
|
EBITDA
Margin (1)
|
12.7
|
%
|
13.6
|
%
|
13.3
|
%
|
14.7
|
%
|
Process Industries
|
|
|
|
|
Net sales
|
$
|
610.1
|
|
$
|
568.7
|
|
$
|
1,194.3
|
|
$
|
1,089.6
|
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA) (1)
|
$
|
163.5
|
|
$
|
141.2
|
|
$
|
319.1
|
|
$
|
272.2
|
|
EBITDA
Margin (1)
|
26.8
|
%
|
24.8
|
%
|
26.7
|
%
|
25.0
|
%
|
Unallocated corporate
expense
|
$
|
(13.4)
|
|
$
|
(11.6)
|
|
$
|
(26.3)
|
|
$
|
(23.2)
|
|
Corporate pension and
other postretirement benefit related
expense (2)
|
(11.6)
|
|
(3.5)
|
|
(14.2)
|
|
(4.4)
|
|
Acquisition-related
gain (3)
|
—
|
|
—
|
|
—
|
|
0.6
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
Net sales
|
$
|
1,153.7
|
|
$
|
1,062.9
|
|
$
|
2,278.3
|
|
$
|
2,088.3
|
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA) (1)
|
$
|
207.6
|
|
$
|
193.4
|
|
$
|
422.8
|
|
$
|
392.1
|
|
EBITDA
Margin (1)
|
18.0
|
%
|
18.2
|
%
|
18.6
|
%
|
18.8
|
%
|
|
|
|
|
|
(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)
|
|
|
|
June 30,
2022
|
|
December 31,
2021
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
305.3
|
|
|
$
|
257.1
|
|
Restricted
cash
|
0.7
|
|
|
0.8
|
|
Accounts receivable,
net
|
756.3
|
|
|
626.4
|
|
Unbilled
receivables
|
107.3
|
|
|
104.5
|
|
Inventories,
net
|
1,158.0
|
|
|
1,042.7
|
|
Other current
assets
|
152.8
|
|
|
182.0
|
|
Total Current
Assets
|
2,480.4
|
|
|
2,213.5
|
|
Property, plant and
equipment, net
|
1,096.1
|
|
|
1,055.3
|
|
Operating lease
assets
|
109.1
|
|
|
118.9
|
|
Goodwill and other
intangible assets
|
1,663.2
|
|
|
1,691.5
|
|
Other assets
|
93.7
|
|
|
91.5
|
|
Total Assets
|
$
|
5,442.5
|
|
|
$
|
5,170.7
|
|
LIABILITIES
|
|
|
|
Accounts
payable
|
$
|
397.2
|
|
|
$
|
430.0
|
|
Short-term debt,
including current portion of long-term debt
|
81.6
|
|
|
53.8
|
|
Income taxes
|
36.4
|
|
|
26.2
|
|
Accrued
expenses
|
405.3
|
|
|
386.6
|
|
Total Current
Liabilities
|
920.5
|
|
|
896.6
|
|
Long-term
debt
|
1,734.3
|
|
|
1,411.1
|
|
Accrued pension
benefits
|
164.0
|
|
|
155.6
|
|
Accrued postretirement
benefits
|
44.7
|
|
|
45.8
|
|
Long-term operating
lease liabilities
|
70.8
|
|
|
77.6
|
|
Other non-current
liabilities
|
219.0
|
|
|
206.3
|
|
Total
Liabilities
|
3,153.3
|
|
|
2,793.0
|
|
EQUITY
|
|
|
|
The Timken Company
shareholders' equity
|
2,203.6
|
|
|
2,294.9
|
|
Noncontrolling
interest
|
85.6
|
|
|
82.8
|
|
Total Equity
|
2,289.2
|
|
|
2,377.7
|
|
Total Liabilities and
Equity
|
$
|
5,442.5
|
|
|
$
|
5,170.7
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(Dollars in
millions)
|
2022
|
2021
|
|
2022
|
2021
|
Cash Provided by (Used
in)
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
Net Income
|
$
|
105.6
|
|
$
|
107.2
|
|
|
$
|
227.5
|
|
$
|
223.2
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
40.7
|
|
42.2
|
|
|
82.1
|
|
85.2
|
|
Impairment
charges
|
8.8
|
|
1.1
|
|
|
8.8
|
|
4.5
|
|
Stock-based
compensation expense
|
8.5
|
|
6.0
|
|
|
15.6
|
|
12.5
|
|
Pension and other
postretirement expense
|
10.2
|
|
1.5
|
|
|
11.2
|
|
0.5
|
|
Pension and other
postretirement benefit contributions and payments
|
(2.9)
|
|
(12.5)
|
|
|
(8.1)
|
|
(15.0)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
(31.1)
|
|
13.1
|
|
|
(149.3)
|
|
(125.8)
|
|
Unbilled
receivables
|
(19.0)
|
|
12.9
|
|
|
(2.9)
|
|
10.4
|
|
Inventories
|
(55.9)
|
|
(48.1)
|
|
|
(126.1)
|
|
(81.4)
|
|
Accounts
payable
|
(13.8)
|
|
21.3
|
|
|
(6.1)
|
|
41.2
|
|
Accrued
expenses
|
36.1
|
|
13.8
|
|
|
16.6
|
|
30.8
|
|
Income
taxes
|
5.7
|
|
(9.0)
|
|
|
13.8
|
|
(7.4)
|
|
Other,
net
|
(14.6)
|
|
(2.4)
|
|
|
(6.0)
|
|
0.1
|
|
Net Cash Provided by
Operating Activities
|
$
|
78.3
|
|
$
|
147.1
|
|
|
$
|
77.1
|
|
$
|
178.8
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
Capital
expenditures
|
$
|
(40.9)
|
|
$
|
(31.1)
|
|
|
$
|
(75.2)
|
|
$
|
(60.5)
|
|
Acquisitions, net of
cash received
|
(152.3)
|
|
0.1
|
|
|
$
|
(152.3)
|
|
$
|
0.1
|
|
Investments in
short-term marketable securities, net
|
24.2
|
|
(3.9)
|
|
|
23.4
|
|
(13.8)
|
|
Other, net
|
5.3
|
|
0.4
|
|
|
5.4
|
|
0.3
|
|
Net Cash Used in
Investing Activities
|
$
|
(163.7)
|
|
$
|
(34.5)
|
|
|
$
|
(198.7)
|
|
$
|
(73.9)
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
Cash dividends paid to
shareholders
|
$
|
(22.9)
|
|
$
|
(22.9)
|
|
|
$
|
(46.4)
|
|
$
|
(46.7)
|
|
Purchase of treasury
shares
|
(44.3)
|
|
—
|
|
|
(144.3)
|
|
(26.3)
|
|
Proceeds from exercise
of stock options
|
0.2
|
|
11.3
|
|
|
1.6
|
|
25.4
|
|
Payments related to tax
withholding for stock-based compensation
|
(0.6)
|
|
(5.7)
|
|
|
(8.1)
|
|
(23.5)
|
|
Net proceeds (payments)
from credit facilities
|
41.6
|
|
(91.1)
|
|
|
30.5
|
|
(41.4)
|
|
Net proceeds (payments)
on long-term debt
|
(0.5)
|
|
(4.1)
|
|
|
341.1
|
|
(6.4)
|
|
Other, net
|
(0.8)
|
|
—
|
|
|
3.0
|
|
—
|
|
Net Cash (Used in)
Provided by Financing Activities
|
$
|
(27.3)
|
|
$
|
(112.5)
|
|
|
$
|
177.4
|
|
$
|
(118.9)
|
|
Effect of exchange rate
changes on cash
|
(6.5)
|
|
3.1
|
|
|
(7.7)
|
|
(0.8)
|
|
(Decrease) Increase in
Cash, Cash Equivalents and Restricted Cash
|
$
|
(119.2)
|
|
$
|
3.2
|
|
|
$
|
48.1
|
|
$
|
(14.8)
|
|
Cash, Cash Equivalents
and Restricted Cash at Beginning of Period
|
425.2
|
|
303.1
|
|
|
257.9
|
|
321.1
|
|
Cash, Cash Equivalents
and Restricted Cash at End of Period
|
$
|
306.0
|
|
$
|
306.3
|
|
|
$
|
306.0
|
|
$
|
306.3
|
|
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
June 30,
|
|
Six Months Ended
June 30,
|
|
2022
|
|
EPS
|
2021
|
|
EPS
|
|
2022
|
|
EPS
|
2021
|
|
EPS
|
Net Income Attributable
to The Timken Company
|
$
|
105.0
|
|
|
$
|
1.42
|
|
$
|
104.8
|
|
|
$
|
1.36
|
|
|
$
|
223.2
|
|
|
$
|
2.98
|
|
$
|
218.1
|
|
|
$
|
2.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment, restructuring and reorganization charges
(2)
|
$
|
2.0
|
|
|
|
$
|
2.2
|
|
|
|
|
$
|
3.6
|
|
|
|
$
|
7.4
|
|
|
|
Corporate
pension and other postretirement benefit related expense
(3)
|
11.6
|
|
|
|
3.5
|
|
|
|
|
14.2
|
|
|
|
4.4
|
|
|
|
Russia-related charges (4)
|
8.4
|
|
|
|
—
|
|
|
|
|
13.0
|
|
|
|
—
|
|
|
|
Acquisition-related
charges (5)
|
1.6
|
|
|
|
1.4
|
|
|
|
|
2.7
|
|
|
|
0.6
|
|
|
|
Noncontrolling interest of above adjustments
|
(4.5)
|
|
|
|
—
|
|
|
|
|
(5.8)
|
|
|
|
0.2
|
|
|
|
Provision
for income taxes (6)
|
(0.2)
|
|
|
|
(5.8)
|
|
|
|
|
(5.3)
|
|
|
|
(17.9)
|
|
|
|
Total
Adjustments:
|
18.9
|
|
|
0.25
|
|
1.3
|
|
|
0.01
|
|
|
22.4
|
|
|
0.30
|
|
(5.3)
|
|
|
(0.07)
|
|
Adjusted Net Income
Attributable to The Timken Company
|
$
|
123.9
|
|
|
$
|
1.67
|
|
$
|
106.1
|
|
|
$
|
1.37
|
|
|
$
|
245.6
|
|
|
$
|
3.28
|
|
$
|
212.8
|
|
|
$
|
2.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) Russia-related charges include
impairments or allowances recorded against certain property, plant
and equipment, inventory and trade receivables 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Acquisition-related charges 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 transactions and certain
unsuccessful transactions, as well as any resulting inventory
step-up impact. In addition, the 2021 acquisition-related charges
includes an acquisition-related gain due to measurement period
adjustments to the bargain purchase gain on the acquisition of the
assets of Aurora that closed on November 30, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
June 30,
|
|
Six Months Ended
June 30,
|
|
2022
|
Percentage to
Net Sales
|
2021
|
Percentage to
Net Sales
|
|
2022
|
Percentage to
Net Sales
|
2021
|
Percentage to
Net Sales
|
Net Income
|
$
|
105.6
|
|
9.2
|
%
|
$
|
107.2
|
|
10.1
|
%
|
|
$
|
227.5
|
|
10.0
|
%
|
$
|
223.2
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
44.0
|
|
|
29.4
|
|
|
|
82.2
|
|
|
54.7
|
|
|
Interest
expense
|
18.3
|
|
|
15.3
|
|
|
|
32.6
|
|
|
30.2
|
|
|
Interest
income
|
(1.0)
|
|
|
(0.7)
|
|
|
|
(1.6)
|
|
|
(1.2)
|
|
|
Depreciation and
amortization
|
40.7
|
|
|
42.2
|
|
|
|
82.1
|
|
|
85.2
|
|
|
Consolidated
EBITDA
|
$
|
207.6
|
|
18.0
|
%
|
$
|
193.4
|
|
18.2
|
%
|
|
$
|
422.8
|
|
18.6
|
%
|
$
|
392.1
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Impairment, restructuring and reorganization charges
(1)
|
$
|
2.0
|
|
|
$
|
2.0
|
|
|
|
$
|
3.6
|
|
|
$
|
6.9
|
|
|
Corporate
pension and other postretirement benefit related expense
(2)
|
11.6
|
|
|
3.5
|
|
|
|
14.2
|
|
|
4.4
|
|
|
Russia-related charges (3)
|
8.4
|
|
|
—
|
|
|
|
13.0
|
|
|
—
|
|
|
Acquisition-related charges (4)
|
1.6
|
|
|
1.4
|
|
|
|
2.7
|
|
|
0.6
|
|
|
Total Adjustments
|
23.6
|
|
2.0
|
%
|
6.9
|
|
0.6
|
%
|
|
33.5
|
|
1.4
|
%
|
11.9
|
|
0.5
|
%
|
Adjusted
EBITDA
|
$
|
231.2
|
|
20.0
|
%
|
$
|
200.3
|
|
18.8
|
%
|
|
$
|
456.3
|
|
20.0
|
%
|
$
|
404.0
|
|
19.3
|
%
|
|
|
|
|
|
|
|
|
|
|
(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) Russia-related charges include
impairments or allowances recorded against certain property, plant
and equipment, inventory and trade receivables 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.
|
|
|
|
|
|
|
|
|
|
|
(4) Acquisition-related charges represent the contingent
consideration related to the acquisition of iMS that closed on
August 20, 2021, and deal-related expenses associated with
completed transactions and certain unsuccessful transactions, as
well as any resulting inventory step-up impact. In addition, the
2021 acquisition-related charges includes an acquisition-related
gain due to measurement period adjustments to the bargain purchase
gain on the acquisition of the assets of Aurora that closed on
November 30, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
June 30,
|
|
Six Months Ended
June 30,
|
(Dollars in millions)
|
2022
|
Percentage
to Net
Sales
|
|
2021
|
Percentage
to Net
Sales
|
|
2022
|
Percentage
to Net
Sales
|
2021
|
Percentage
to Net
Sales
|
Earnings before
interest, taxes, depreciation and
amortization (EBITDA)
|
$
|
69.1
|
|
12.7
|
%
|
|
$
|
67.3
|
|
13.6
|
%
|
|
$
|
144.2
|
|
13.3
|
%
|
$
|
146.9
|
|
14.7
|
%
|
Impairment, restructuring and reorganization charges
(1)
|
1.0
|
|
|
|
1.2
|
|
|
|
2.0
|
|
|
1.5
|
|
|
Russia-related charges (2)
|
9.4
|
|
|
|
—
|
|
|
|
12.5
|
|
|
—
|
|
|
Acquisition-related charges (3)
|
—
|
|
|
|
0.2
|
|
|
|
—
|
|
|
0.4
|
|
|
Adjusted
EBITDA
|
$
|
79.5
|
|
14.6
|
%
|
|
$
|
68.7
|
|
13.9
|
%
|
|
$
|
158.7
|
|
14.6
|
%
|
$
|
148.8
|
|
14.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Process Industries
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(Dollars in millions)
|
2022
|
Percentage
to Net
Sales
|
|
2021
|
Percentage
to Net
Sales
|
|
2022
|
Percentage
to Net
Sales
|
2021
|
Percentage
to Net
Sales
|
Earnings before
interest, taxes, depreciation and
amortization (EBITDA)
|
$
|
163.5
|
|
26.8
|
%
|
|
$
|
141.2
|
|
24.8
|
%
|
|
$
|
319.1
|
|
26.7
|
%
|
$
|
272.2
|
|
25.0
|
%
|
Impairment, restructuring and reorganization charges
(1)
|
1.0
|
|
|
|
0.8
|
|
|
|
1.6
|
|
|
5.4
|
|
|
Russia-related charges (2)
|
(1.0)
|
|
|
|
—
|
|
|
|
0.5
|
|
|
—
|
|
|
Acquisition-related charges (3)
|
1.0
|
|
|
|
0.2
|
|
|
|
1.4
|
|
|
0.3
|
|
|
Adjusted
EBITDA
|
$
|
164.5
|
|
27.0
|
%
|
|
$
|
142.2
|
|
25.0
|
%
|
|
$
|
322.6
|
|
27.0
|
%
|
$
|
277.9
|
|
25.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(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) Russia-related charges include
impairments or allowances recorded against certain property, plant
and equipment, inventory and trade receivables 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.
|
|
|
|
|
|
|
|
|
|
|
|
(3) 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.
|
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)
|
|
|
|
|
|
|
|
June 30,
2022
|
December 31,
2021
|
Short-term debt,
including current portion of long-term debt
|
|
|
$
|
81.6
|
|
$
|
53.8
|
|
Long-term
debt
|
|
|
1,734.3
|
|
1,411.1
|
|
Total
Debt
|
|
|
$
|
1,815.9
|
|
$
|
1,464.9
|
|
Less: Cash and cash
equivalents
|
|
|
(305.3)
|
|
(257.1)
|
|
Net Debt
|
|
|
$
|
1,510.6
|
|
$
|
1,207.8
|
|
|
|
|
|
|
Total Equity
|
|
|
$
|
2,289.2
|
|
$
|
2,377.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of Net Debt to
Capital
|
|
|
39.8
|
%
|
33.7
|
%
|
|
|
|
|
|
Adjusted EBITDA for the
Twelve Months Ended
|
|
|
$
|
770.3
|
|
$
|
718.0
|
|
|
|
|
|
|
Ratio of Net Debt to
Adjusted EBITDA
|
|
|
2.0
|
|
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
June 30,
|
Six Months Ended
June 30,
|
|
2022
|
2021
|
2022
|
2021
|
Net cash provided by
operating activities
|
$
|
78.3
|
|
$
|
147.1
|
|
$
|
77.1
|
|
$
|
178.8
|
|
Less: capital
expenditures
|
(40.9)
|
|
(31.1)
|
|
(75.2)
|
|
(60.5)
|
|
Free cash
flow
|
$
|
37.4
|
|
$
|
116.0
|
|
$
|
1.9
|
|
$
|
118.3
|
|
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
June 30, 2022
|
Twelve Months Ended
December 31, 2021
|
Net Income
|
$
|
385.8
|
|
$
|
381.5
|
|
Provision for income
taxes
|
122.6
|
|
95.1
|
|
Interest
expense
|
61.2
|
|
58.8
|
|
Interest
income
|
(2.7)
|
|
(2.3)
|
|
Depreciation and
amortization
|
164.7
|
|
167.8
|
|
Consolidated
EBITDA
|
$
|
731.6
|
|
$
|
700.9
|
|
Adjustments:
|
|
|
Impairment,
restructuring and reorganization
charges (1)
|
$
|
11.0
|
|
$
|
14.3
|
|
Corporate
pension and other postretirement benefit related expense
(2)
|
10.1
|
|
0.3
|
|
Acquisition-related
charges (3)
|
4.4
|
|
2.3
|
|
Russia-related
charges (4)
|
13.0
|
|
—
|
|
Tax indemnification and
related items
|
0.2
|
|
0.2
|
|
Total Adjustments
|
38.7
|
|
17.1
|
|
Adjusted
EBITDA
|
$
|
770.3
|
|
$
|
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 transactions 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 impairments or
allowances recorded against certain property, plant equipment,
inventory and trade receivables 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 Net Sales to Organic
Sales
|
(Unaudited)
|
|
|
|
|
|
|
The following
reconciliation is provided as additional relevant information about
the Company's performance deemed useful to investors. Management
believes that net sales, excluding the impact of acquisitions and
foreign currency exchange rate changes, allow investors and the
Company to meaningfully evaluate the percentage change in net sales
on a comparable basis from period to period.
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2022
|
|
Three Months
Ended
June 30, 2021
|
|
$ Change
|
% Change
|
Net sales
|
$
|
1,153.7
|
|
|
$
|
1,062.9
|
|
|
$
|
90.8
|
|
8.5
|
%
|
Less:
Acquisitions
|
3.9
|
|
|
—
|
|
|
3.9
|
|
NM
|
|
Currency
|
(34.7)
|
|
|
—
|
|
|
(34.7)
|
|
NM
|
|
Net sales, excluding
the impact of acquisitions and currency
|
$
|
1,184.5
|
|
|
$
|
1,062.9
|
|
|
$
|
121.6
|
|
11.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
$
|
5.15
|
|
|
$
|
5.45
|
|
|
|
|
|
Forecasted
Adjustments:
|
|
|
|
Restructuring and other special items,
net (1)
|
0.35
|
|
|
0.35
|
|
Total
Adjustments:
|
$
|
0.35
|
|
|
$
|
0.35
|
|
Forecasted full year
adjusted diluted earnings per share
|
$
|
5.50
|
|
|
$
|
5.80
|
|
|
|
|
|
(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