NORTH CANTON, Ohio,
April 27, 2016 /PRNewswire/
-- The Timken Company (NYSE: TKR; www.timken.com), a global
leader in bearings, today reported sales of $684 million for the first quarter of 2016,
approximately 5 percent lower than the same period a year ago.
Excluding the impact of currency, sales were down 2.5 percent,
primarily due to market weakness across most sectors partially
offset by growth in automotive and the net benefit of acquisitions
and divestitures.
In the first quarter, Timken posted net income of $63.0 million or $0.78 per diluted share, versus net loss of
$135.2 million or $1.54 per basic share a year ago. Net income
in the quarter included certain unusual items including pre-tax
income of $47.7 million related to
the U.S. Continued Dumping and Subsidy Offset Act (reference Table
I).
Adjusted net income was $36.9 million or $0.46 per diluted share. This compares with
adjusted net income of $44.2 million
or $0.50 per diluted share for the
same period in 2015. The year-over-year change in adjusted net
income reflects lower volume, unfavorable price/mix and currency,
partially offset by the impact of lower raw material and operating
costs as well as lower SG&A expenses. Earnings per share also
benefited from share buybacks.
Free cash flow for the quarter was $22.9 million, compared with net cash used
of $2.7 million in the
prior-year period. The increase in free cash flow was primarily
driven by improvements in working capital. In addition, the company
returned $55.7 million in
capital to shareholders in the first quarter, through the
repurchase of 1.2 million shares and the payment of its 375th
consecutive quarterly dividend.
"During the quarter, we executed well and delivered
first-quarter results in line with our expectations even though
market conditions globally remain weak, particularly in
commodity-related sectors," said Richard G.
Kyle, Timken president and chief executive officer. "Looking
ahead, we expect continued challenging market conditions in 2016.
However, we are reaffirming our full-year earnings outlook,
confident in our ability to win new business and deliver on our
cost-reduction initiatives."
Table I: Adjusted
Net Income & Earnings Per Share (EPS)
|
|
|
|
2016 –
1Q
|
2015 –
1Q
|
|
($M)
|
EPS
|
($M)
|
EPS
|
Net Income (Loss)
Attributable to
The Timken
Company
|
$ 63.0
|
$ 0.78
|
$ (135.2)
|
$ (1.54)
|
Adjustments*:
|
|
|
|
|
Pension settlement
charges
|
$ 1.2
|
$ 0.02
|
$ 215.2
|
$ 2.45
|
Impairment and
restructuring charges
|
10.7
|
0.13
|
6.6
|
0.07
|
CDSOA income, net of
related expenses
|
(47.7)
|
(0.59)
|
---
|
---
|
Gain on dissolution
of a subsidiary
|
(1.4)
|
(0.02)
|
---
|
---
|
Provision (benefit)
for income taxes
|
11.1
|
0.14
|
(42.4)
|
(0.48)
|
Total
adjustments
|
(26.1)
|
(0.32)
|
179.4
|
2.04
|
Net Income, after
adjustments
|
$ 36.9
|
$ 0.46
|
$ 44.2
|
$ 0.50
|
*Adjustments are
pre-tax, with net tax provision (benefit) listed
separately.
|
First-Quarter Segment Results
Mobile Industries reported first-quarter sales of
$383.2 million, approximately
2 percent lower than the same period a year ago. Excluding the
impact of currency, sales were roughly flat compared with the prior
year, as growth in automotive and the net benefit of acquisitions
and divestitures offset market-related declines in off‑highway,
rail and aerospace.
Earnings before interest and taxes (EBIT) for the first quarter
were $30.2 million or
7.9 percent of sales, compared with EBIT of $35.4 million or 9 percent of sales for the
same period a year ago. Adjusted EBIT was $35.9 million or 9.4 percent of sales,
compared with $36.4 million or
9.3 percent of sales in the first quarter last year. The
slight decline in adjusted EBIT reflects the impact of unfavorable
price/mix and lower volume, partially offset by lower raw material
and operating costs, and lower SG&A expenses.
Process Industries sales of $300.8
million for the first quarter declined approximately
9 percent from the same period a year ago. Excluding the
impact of currency, sales were down roughly 6 percent, driven by
weaker demand in the heavy industries sector and the industrial
aftermarket, partially offset by the benefit of acquisitions.
EBIT for the quarter was $32.6 million or 10.8 percent of sales,
compared with EBIT of $45.2 million or 13.7 percent of sales for
the same period a year ago. Adjusted EBIT was $36.2 million or 12 percent of sales,
compared with $50.8 million or
15.4 percent of sales in the first quarter last year. The
decrease in adjusted EBIT was driven by the impact of lower volume
and currency, partially offset by lower SG&A expenses and raw
material costs.
2016 Outlook
The company expects 2016 revenue to be down approximately 5
percent from 2015, including 2 percent from currency
declines.
Within its segments, the company estimates full-year 2016:
- Mobile Industries' sales to be down approximately 6 percent.
Excluding the impact of currency, sales are expected to be down
around 4 percent, reflecting lower demand in rail, off-highway and
aerospace, offset partially by growth in automotive and the net
benefit of acquisitions and divestitures.
- Process Industries' sales to be down approximately 4 percent.
Excluding the impact of currency, sales are expected to be down
around 2 percent, driven by declines in the heavy industries sector
and the industrial aftermarket, partially offset by organic growth
in wind energy and the benefit of acquisitions.
Timken anticipates 2016 earnings per diluted share to range from
$1.65 to $1.75 for the full year on a
GAAP basis. Excluding unusual items, the company expects 2016
adjusted earnings per diluted share to be $1.90 to $2.00.
Conference Call Information
Timken will host a conference call today at 10:00 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:
|
Wednesday, April 27,
2016
|
|
10:00 a.m. Eastern
Time
|
|
Live Dial-In:
800-500-0920 or 719-457-2731
|
|
(Call in 10 minutes
prior to be included.)
|
|
Conference ID:
Timken's 1Q Earnings Call
|
|
Live
Webcast: www.timken.com/investors
|
|
|
Conference Call
Replay:
|
Replay Dial-In
available through May 11, 2016:
|
|
888-203-1112 or
719-457-0820
|
|
Replay Passcode:
6334899
|
About The Timken Company
The Timken Company (NYSE: TKR; www.timken.com) engineers,
manufactures and markets bearings, gear drives, belts, chain and
related products, and offers a spectrum of powertrain rebuild and
repair services. The leading authority on tapered roller bearings,
Timken today applies its deep knowledge of metallurgy, tribology
and mechanical power transmission across a variety of bearings and
related systems to improve reliability and efficiency of machinery
and equipment all around the world. The company's growing product
and services portfolio features many strong industrial brands
including Timken®, Fafnir®, Philadelphia
Gear®, Carlisle®, Drives® and
Interlube™. Known for its quality products and
collaborative technical sales model, Timken posted $2.9 billion in sales in 2015. With more
than 14,000 employees operating from 28 countries, Timken makes the
world more productive and keeps industry in motion.
Certain statements in this release (including statements
regarding the company's forecasts, estimates plans and
expectations) that are not historical in nature are
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. In particular, the
statements related to expectations regarding the company's future
financial performance, including information under the heading
"Outlook," are forward-looking.
The company cautions that actual results may differ
materially from those projected or implied in forward-looking
statements due to a variety of important factors, including: the
finalization of the company's financial statements for the first
quarter of 2016; the company's ability to respond to the changes in
its end markets that could affect demand for the company's
products; unanticipated changes in business relationships with
customers or their purchases from the company; changes in the
financial health of the company's customers, which may have an
impact on the company's revenues, earnings and impairment charges;
fluctuations in raw material and energy costs; the impact of the
company's last-in, first-out accounting; weakness in global or
regional economic conditions and capital markets; fluctuations in
currency valuations; changes in the expected costs associated with
product warranty claims; the ability to achieve satisfactory
operating results in the integration of acquired companies; the
impact on operations of general economic conditions; fluctuations
in customer demand; the impact on the company's pension obligations
due to changes in interest rates, investment performance and other
tactics designed to reduce risk; the company's ability to complete
and achieve the benefits of announced plans, programs, initiatives,
and capital investments; and retention of U.S. Continued Dumping
and Subsidy Offset Act distributions. Additional factors are
discussed in the company's filings with the Securities and Exchange
Commission, including the company's Annual Report on Form 10-K for
the year ended Dec. 31, 2015,
quarterly reports on Form 10-Q and current reports on Form 8-K.
Except as required by the federal securities laws, the company
undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Media Relations:
234.262.3514
mediarelations@timken.com
Investor Relations:
Shelly
Chadwick, Vice President – Treasury & Investor
Relations
234.262.3223
shelly.chadwick@timken.com
The Timken
Company
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
(Dollars in
millions, except share data) (Unaudited)
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
2016
|
2015
|
|
Net sales
|
$
684.0
|
$
722.5
|
|
Cost of products
sold
|
503.1
|
520.0
|
|
Gross
Profit
|
180.9
|
202.5
|
|
Selling, general
& administrative expenses (SG&A)
|
118.3
|
128.5
|
|
Impairment and
restructuring charges
|
10.5
|
6.2
|
|
Pension settlement
charges
|
1.2
|
215.2
|
|
Operating Income
(Loss)
|
50.9
|
(147.4)
|
|
Continued Dumping and
Subsidy Offset Act income, net of related expenses
(1)
|
47.7
|
-
|
|
Other (expense)
income, net
|
-
|
(1.4)
|
|
Earnings (Loss)
Before Interest and Taxes (EBIT) (2)
|
98.6
|
(148.8)
|
|
Interest expense,
net
|
(8.1)
|
(7.3)
|
|
Income (Loss)
Before Income Taxes
|
90.5
|
(156.1)
|
|
Provision (benefit)
for income taxes
|
27.6
|
(21.3)
|
|
Net Income
(Loss)
|
62.9
|
(134.8)
|
|
Less: Net (loss)
income attributable to noncontrolling interest
|
(0.1)
|
0.4
|
|
Net Income (Loss)
Attributable to The Timken Company
|
$
63.0
|
$
(135.2)
|
|
|
|
|
|
Net Income (Loss)
per Common Share Attributable to The Timken Company Common
Shareholders
|
|
|
|
Basic Earnings
(Loss) per share
|
$
0.79
|
$
(1.54)
|
|
|
|
|
|
Diluted Earnings
(Loss) per share
|
$
0.78
|
$
(1.54)
|
|
|
|
|
|
Average Shares
Outstanding
|
79,769,761
|
87,670,640
|
|
Average Shares
Outstanding - assuming dilution
|
80,437,533
|
87,670,640
|
|
|
|
|
|
(1) U.S.
Continued Dumping and Subsidy Offset Act (CDSOA) income, net of
related expenses, represents the amount of funds awarded to the
Company from monies collected by U.S. Customs and Border Protection
(U.S. Customs) on entries of merchandise subject to antidumping
orders that entered the U.S. prior to October 1,
2007.
|
|
(2) EBIT
is defined as operating income plus other income (expense).
EBIT is an important financial measure used in the management of
the business, including decisions concerning the allocation of
resources and assessment of performance. Management believes
that reporting EBIT is useful to investors as this measure is
representative of the Company's performance.
|
|
|
|
|
|
BUSINESS
SEGMENTS
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
March 31,
|
(Dollars in
millions)
|
2016
|
2015
|
Mobile
Industries
|
|
|
|
|
Net sales
|
$
|
383.2
|
$
|
393.0
|
Earnings before
interest and taxes (EBIT) (1)
|
$
|
30.2
|
$
|
35.4
|
EBIT Margin
(1)
|
|
7.9 %
|
|
9.0 %
|
|
|
|
|
|
Process
Industries
|
|
|
|
|
Net sales
|
$
|
300.8
|
$
|
329.5
|
Earnings before
interest and taxes (EBIT) (1)
|
$
|
32.6
|
$
|
45.2
|
EBIT Margin
(1)
|
|
10.8 %
|
|
13.7%
|
|
|
|
|
|
Unallocated corporate
expense
|
$
|
(10.7)
|
$
|
(14.2)
|
Unallocated pension
settlement charges (2)
|
|
(1.2)
|
|
(215.2)
|
CDSOA income, net of
related expenses (3)
|
|
47.7
|
|
—
|
|
|
|
|
|
Consolidated
|
|
|
|
|
Net sales
|
$
|
684.0
|
$
|
722.5
|
Earnings
(loss) before interest and taxes (EBIT)
(1)
|
$
|
98.6
|
$
|
(148.8)
|
EBIT Margin
(1)
|
|
14.4 %
|
|
(20.6)%
|
|
|
|
|
|
(1) EBIT
is defined as operating income plus other income (expense).
EBIT Margin is EBIT as a percentage of net sales. EBIT and
EBIT Margin are important financial measures used in the management
of the business, including decisions concerning the allocation of
resources and assessment of performance. Management believes
that reporting EBIT and EBIT Margin is useful to investors as these
measures are representative of the Company's
performance.
|
|
|
|
|
|
(2)
Unallocated pension settlement charges in 2015 primarily related to
the purchase of a group annuity contract from Prudential Insurance
Company of America (Prudential) to pay and administer future
pension benefits for approximately 5,000 U.S. Timken retirees, as
well as lump sum distributions to new
retirees.
|
|
|
|
|
|
(3) CDSOA
income, net of related expenses, represents the amount of funds
awarded to the Company from monies collected by U.S. Customs on
entries of merchandise subject to antidumping orders that entered
the U.S. prior to October 1, 2007.
|
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
|
|
(Unaudited)
|
|
(Dollars in
millions)
|
March 31,
2016
|
December 31,
2015
|
ASSETS
|
|
|
Cash and cash
equivalents
|
$
137.3
|
$
129.6
|
Restricted
cash
|
0.2
|
0.2
|
Accounts
receivable
|
465.0
|
454.6
|
Inventories,
net
|
551.3
|
543.2
|
Other current
assets
|
121.1
|
78.8
|
Total Current
Assets
|
1,274.9
|
1,206.4
|
|
|
|
Property, plant and
equipment, net
|
780.1
|
777.8
|
|
|
|
Goodwill and other
intangible assets
|
593.8
|
598.6
|
Non-current pension
assets
|
88.1
|
86.3
|
Other
assets
|
113.2
|
115.0
|
Total
Assets
|
$
2,850.1
|
$
2,784.1
|
LIABILITIES
|
|
|
Accounts
payable
|
$
177.9
|
$
159.7
|
Short-term debt,
including current portion of long-term debt
|
15.3
|
77.1
|
Income
taxes
|
30.2
|
13.1
|
Accrued
expenses
|
219.2
|
255.4
|
Total Current
Liabilities
|
442.6
|
505.3
|
|
|
|
Long-term
debt
|
673.4
|
579.4
|
Accrued pension
cost
|
149.2
|
146.9
|
Accrued
postretirement benefit cost
|
133.1
|
136.1
|
Other non-current
liabilities
|
76.2
|
71.8
|
Total
Liabilities
|
1,474.5
|
1,439.5
|
EQUITY
|
|
|
The Timken Company
shareholders' equity
|
1,349.7
|
1,324.5
|
Noncontrolling
Interest
|
25.9
|
20.1
|
Total
Equity
|
1,375.6
|
1,344.6
|
Total Liabilities and
Equity
|
$
2,850.1
|
$
2,784.1
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
(Dollars in
millions)
|
2016
|
2015
|
Cash Provided
(Used)
|
|
|
OPERATING
ACTIVITIES
|
|
|
Net income (loss)
attributable to The Timken Company
|
$
63.0
|
$
(135.2)
|
Net (loss) income
attributable to noncontrolling interest
|
(0.1)
|
0.4
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
Depreciation
and amortization
|
32.6
|
33.5
|
Impairment
charges
|
2.6
|
2.7
|
Loss on sale
of assets
|
0.6
|
0.3
|
CDSOA
receivable
|
(48.1)
|
—
|
Pension and
other postretirement expense
|
9.3
|
225.1
|
Pension and
other postretirement benefit contributions and payments
|
(10.2)
|
(6.9)
|
Changes in
operating assets and liabilities:
|
|
|
Accounts
receivable
|
(4.9)
|
(29.6)
|
Inventories
|
(0.1)
|
(12.8)
|
Accounts payable
|
16.5
|
27.9
|
Accrued expenses
|
(28.4)
|
(63.5)
|
Income taxes
|
22.4
|
(29.7)
|
Other, net
|
(8.1)
|
4.8
|
Net Cash Provided by
Operating Activities
|
$
47.1
|
$
17.0
|
INVESTING
ACTIVITIES
|
|
|
Capital
expenditures
|
(24.2)
|
(19.7)
|
Other
|
(0.4)
|
5.7
|
Net Cash Used by
Investing Activities
|
$
(24.6)
|
$
(14.0)
|
FINANCING
ACTIVITIES
|
|
|
Cash dividends
paid to shareholders
|
(20.7)
|
(21.9)
|
Purchase of
treasury shares
|
(35.0)
|
(96.8)
|
Net payments
on credit facilities
|
(13.8)
|
(3.6)
|
Net proceeds
(payments) from long-term debt
|
45.0
|
(1.1)
|
Other
|
5.1
|
2.6
|
Net Cash Used by
Financing Activities
|
$
(19.4)
|
$
(120.8)
|
Effect of exchange
rate changes on cash
|
4.6
|
(6.6)
|
Increase (Decrease)
in Cash and Cash Equivalents
|
$
7.7
|
$
(124.4)
|
Cash and cash
equivalents at Beginning of Period
|
129.6
|
278.8
|
Cash and Cash
Equivalents at End of Period
|
$
137.3
|
$
154.4
|
Reconciliations of
Adjusted Net Income to GAAP Income (Loss) and Adjusted Diluted
Earnings Per Share to GAAP Earnings (Loss) Per
Share:
|
(Unaudited)
|
|
|
|
|
These reconciliations
are provided as additional relevant information about the Company's
performance. Management believes that adjusted net income and
adjusted diluted earnings per share, after adjustments, are
representative of the Company's performance and therefore useful to
investors.
|
|
|
Three Months
Ended
|
(Dollars in
millions, except share data)
|
March
31,
|
|
2016
|
EPS
|
2015
|
EPS
|
Income (Loss) from
The Timken Company
|
$
62.9
|
|
$ (134.8)
|
|
Less: Net (loss) income attributable to noncontrolling
interest
|
(0.1)
|
|
0.4
|
|
Net Income (Loss) Attributable to The Timken Company
|
$
63.0
|
$
0.78
|
$ (135.2)
|
$
(1.54)
|
|
|
|
|
|
Adjustments:(1)
|
|
|
|
|
Pension
settlement charges(2)
|
$
1.2
|
$
0.02
|
$ 215.2
|
$
2.45
|
Impairment and
restructuring charges(3)
|
10.7
|
0.13
|
6.6
|
0.07
|
CDSOA income,
net of related expenses(4)
|
(47.7)
|
(0.59)
|
—
|
—
|
Gain on
dissolution of a subsidiary
|
(1.4)
|
(0.02)
|
—
|
—
|
Provision
(benefit) for income taxes(5)
|
11.1
|
0.14
|
(42.4)
|
(0.48)
|
Total Adjustments:
|
(26.1)
|
(0.32)
|
179.4
|
2.04
|
Adjusted Net Income
from The Timken Company
|
$
36.9
|
$
0.46
|
$
44.2
|
$
0.50
|
|
|
|
|
|
(1)
Adjustments are pre-tax, with net tax provisions (benefit) listed
separately.
|
|
|
|
|
|
(2)
Pension settlement charges in 2015 primarily related to the
purchase of a group annuity contract from Prudential to pay
and administer future pension benefits for approximately 5,000 U.S.
Timken retirees, as well as lump sum distributions to new
retirees.
|
|
|
|
|
|
(3)
Impairment and restructuring charges, including rationalization
costs recorded in cost of products sold, related to plant closures,
the rationalization of certain plants and severance related to cost
reduction initiatives.
|
|
|
|
|
|
(4) CDSOA
income, net of related expenses, represents the amount of funds
awarded to the Company from monies collected by U.S. Customs on
entries of merchandise subject to antidumping orders that entered
the U.S. prior to October 1, 2007.
|
|
|
|
|
|
(5)
Provision (benefit) for income taxes includes the tax impact of
pre-tax special items, the impact of discrete tax items recorded
during the respective periods, as well as adjustments to reflect
the use of one overall effective tax rate on adjusted pre-tax
income in interim periods.
|
|
|
|
|
|
Reconciliation of
EBIT to GAAP Net Income (Loss), and EBIT Margin, After Adjustments,
to Net Income (Loss) as a Percentage of Sales and EBIT,
After Adjustments, to
Net Income (Loss):
|
(Unaudited)
|
|
|
|
|
The following
reconciliation is provided as additional relevant information about
the Company's performance. Management believes consolidated
earnings (loss) before interest and taxes (EBIT) is representative
of the Company's performance and that it is appropriate to compare
GAAP net income (loss) to consolidated EBIT. Management also
believes that EBIT and EBIT margin, after adjustments, are
representative of the Company's core operations and therefore
useful to investors.
|
|
|
|
|
|
Three Months
Ended
|
(Dollars in
millions, except share data)
|
March
31,
|
|
2016
|
Percentage to
Net Sales
|
2015
|
Percentage to
Net Sales
|
Net Income
(Loss)
|
$
62.9
|
9.2 %
|
$
(134.8)
|
(18.7)%
|
|
|
|
|
|
Provision (benefits)
for income taxes
|
27.6
|
4.0 %
|
(21.3)
|
(2.9)%
|
Interest
expense
|
8.4
|
1.2 %
|
8.0
|
1.1 %
|
Interest
income
|
(0.3)
|
—%
|
(0.7)
|
(0.1)%
|
Consolidated earnings
(loss) before interest and taxes (EBIT)
|
$
98.6
|
14.4 %
|
$
(148.8)
|
(20.6)%
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Pension
settlement charges (1)
|
$
1.2
|
—%
|
$
215.2
|
29.8 %
|
Impairment and
restructuring charges (2)
|
10.7
|
1.6 %
|
6.6
|
0.9 %
|
CDSOA income,
net of related expenses (3)
|
(47.7)
|
(7.0)%
|
—
|
—%
|
Gain on
dissolution of a subsidiary
|
(1.4)
|
—%
|
—
|
—%
|
Total Adjustments
|
(37.2)
|
(5.4)%
|
221.8
|
30.7 %
|
Consolidated earnings
before interest and taxes (EBIT), after adjustments
|
$
61.4
|
9.0 %
|
$
73.0
|
10.1 %
|
|
|
|
|
|
(1)
Pension settlement charges in 2015 primarily related to the
purchase of a group annuity contract from Prudential to pay and
administer future pension benefits for approximately 5,000 U.S.
Timken retirees, as well as lump sum distributions to new
retirees.
|
|
|
|
|
|
(2)
Impairment and restructuring charges, including rationalization
costs recorded in cost of products sold, related to plant closures,
the rationalization of certain plants and severance related to cost
reduction initiatives.
|
|
|
|
|
|
(3) CDSOA
income, net of related expenses, represents the amount of funds
awarded to the Company from monies collected by U.S. Customs on
entries of merchandise subject to antidumping orders that entered
the U.S. prior to October 1, 2007.
|
|
|
|
|
|
Reconciliation of
segment EBIT Margin, After Adjustments, to segment EBIT as a
Percentage of Sales and segment EBIT, After Adjustments, to segment
EBIT:
|
(Unaudited)
|
|
|
|
|
The following
reconciliation is provided as additional relevant information about
the Company's Mobile Industries and Process Industries segment
performance. Management believes that segment EBIT and EBIT
margin, after adjustments, are representative of the segment's core
operations and therefore useful to
investors.
|
|
|
|
|
|
|
|
|
|
|
Mobile
Industries
|
|
|
|
|
(Dollars in
millions)
|
Three Months
Ended
March 31, 2016
|
Percentage
to Net
Sales
|
Three Months
Ended
March 31, 2015
|
Percentage
to Net
Sales
|
Earnings before
interest and taxes (EBIT)
|
$
30.2
|
7.9 %
|
$
35.4
|
9.0%
|
|
|
|
|
|
Impairment and
restructuring charges(1)
|
7.1
|
1.9 %
|
1.0
|
0.3%
|
Gain on dissolution
of a subsidiary
|
(1.4)
|
(0.4)%
|
-
|
—%
|
Earnings before
interest and taxes (EBIT), after adjustments
|
$
35.9
|
9.4 %
|
$
36.4
|
9.3%
|
|
|
|
|
|
Process
Industries
|
(Dollars in
millions)
|
Three Months
Ended
March 31, 2016
|
Percentage
to Net
Sales
|
Three Months
Ended
March 31, 2015
|
Percentage
to Net
Sales
|
Earnings before
interest and taxes (EBIT)
|
$
32.6
|
10.8 %
|
$
45.2
|
13.7%
|
|
|
|
|
|
Impairment and
restructuring charges(1)
|
3.6
|
1.2 %
|
5.6
|
1.7%
|
Earnings before
interest and taxes (EBIT), after adjustments
|
$
36.2
|
12.0 %
|
$
50.8
|
15.4%
|
|
|
|
|
|
(1)
Impairment and restructuring charges, including rationalization
costs recorded in cost of products sold, related to plant closures,
the rationalization of certain plants and severance related to cost
reduction initiatives.
|
|
|
|
|
|
Reconciliation of
Total Debt to Net Debt and the Ratio of Net Debt to Capital to the
Ratio of Total Debt to Capital:
|
|
(Unaudited)
|
|
These reconciliations
are provided as additional relevant information about the Company's
financial position. Capital, used for the ratio of total debt
to capital, is defined as total debt plus total shareholders'
equity. Capital, used for the ratio of net debt to capital,
is defined as total debt less cash, cash equivalents and restricted
cash plus total shareholders' equity. Management
believes Net Debt and the Ratio of Net Debt to Capital are
important measures of the Company's financial position, due to the
amount of cash and cash equivalents.
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
March 31,
2016
|
December 31,
2015
|
|
Short-term debt,
including current portion of long-term debt
|
$
15.3
|
$
77.1
|
|
Long-term
debt
|
673.4
|
579.4
|
|
Total Debt
|
$
688.7
|
$
656.5
|
|
Less: Cash, cash
equivalents and restricted cash
|
(137.5)
|
(129.8)
|
|
Net
Debt
|
$
551.2
|
$
526.7
|
|
|
|
|
|
Total
equity
|
$
1,375.6
|
$
1,344.6
|
|
|
|
|
|
Ratio of Total Debt
to Capital
|
33.4%
|
32.8%
|
|
Ratio of Net Debt to
Capital
|
28.6%
|
28.1%
|
|
|
|
|
|
Reconciliation of
Free Cash Flow to GAAP Net Cash Provided by Operating
Activities:
|
|
(Unaudited)
|
|
|
|
Management believes
that free cash flow 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,
|
|
|
2016
|
2015
|
|
Net cash provided by
operating activities
|
$
47.1
|
$
17.0
|
|
Less: capital
expenditures
|
(24.2)
|
(19.7)
|
|
Free cash
flow
|
$
22.9
|
$
(2.7)
|
|
|
|
|
|
Reconciliation of
Adjusted Earnings per Share to GAAP Earnings per Share for Full
Year 2016 Outlook:
|
|
(Unaudited)
|
|
This reconciliation
is provided as additional relevant information about the Company's
performance. Management believes that adjusted diluted
earnings per share, after adjustments, are representative of the
Company's performance and therefore useful to investors.
|
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
Low End
Earnings
Per Share
|
High End
Earnings
Per Share
|
|
Forecasted full year
GAAP diluted earnings per share
|
$
1.65
|
$
1.75
|
|
|
|
|
|
Adjustments
(after-tax):
|
|
|
|
CDSOA
income, net of related expenses (1)
|
(0.35)
|
(0.35)
|
|
Pension
settlement charges (2)
|
0.30
|
0.30
|
|
Restructuring charges (3)
|
0.30
|
0.30
|
|
Total Adjustments:
|
$
0.25
|
$
0.25
|
|
Forecasted full year
adjusted diluted earnings per share
|
$
1.90
|
$
2.00
|
|
|
|
|
|
(1) CDSOA
income, net of related expenses, represents the amount of funds
awarded to the Company from monies collected by U.S. Customs on
entries of merchandise subject to antidumping orders that entered
the U.S. prior to October 1, 2007.
|
|
|
|
|
|
(2)
Pension settlement charges primarily related to anticipated lump
sum settlement activity.
|
|
|
|
|
|
(3)
Restructuring charges related to severance and other cost reduction
initiatives.
|
|
|
|
|
|
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SOURCE The Timken Company