NORTH CANTON, Ohio,
Nov. 1, 2021 /PRNewswire/ -- The
Timken Company (NYSE: TKR; www.timken.com), a global industrial
leader in engineered bearings and power transmission
products, today reported third-quarter 2021 sales
of $1.04 billion, up 16 percent from the same period a
year ago, and 13 percent higher than the previous record third
quarter. The increase was driven by organic growth across most
end-market sectors led by industrial distribution and off-highway,
higher pricing and the benefit of currency translation and
acquisitions.
Timken posted net income of $88.1 million or
$1.14 per diluted share in the
third quarter, versus net income of $88.8 million
or $1.16 per diluted share for the same period a year
ago. The slight year-over-year decline was primarily driven by
higher operating costs and the net unfavorable impact of pension
remeasurement and restructuring charges, which were mostly offset
by the impact of higher volume and related manufacturing
utilization, positive price/mix, a lower tax rate and favorable
currency.
Excluding special items (detailed in the attached tables),
adjusted net income in the third quarter was $91.0 million or $1.18 per diluted share, a record for the
third quarter, versus adjusted net income of $86.4 million or $1.13 per diluted
share for the same period in 2020.
Net cash from operations for the third quarter was $105.8 million, and free cash flow was
$62.7 million. During the quarter,
Timken returned $53.1 million of cash
to shareholders with the payment of its 397th consecutive quarterly
dividend and the repurchase of 400 thousand shares of company
stock. Timken also completed the acquisition of Intelligent Machine
Solutions (iMS), which expands the company's growing linear motion
portfolio. Timken ended the third quarter with a strong balance
sheet; financial leverage as measured by net debt to adjusted
earnings before interest, taxes, depreciation and amortization
(EBITDA) was 1.6 times as of September 30,
2021.
"In the third quarter, Timken responded to the strong market
demand and achieved double-digit revenue growth compared to the
prior year despite the challenging operating environment," said
Richard G. Kyle, Timken president
and chief executive officer. "While our performance was impacted by
supply chain disruptions, inflation and higher costs to serve
customers, we stayed focused on winning new business and advancing
our strategic initiatives."
Third-Quarter 2021 Segment Results
Process Industries sales of $550.0 million
increased 18 percent from the same period a year ago. The increase
was driven by organic growth across most sectors led by
distribution and general industrial, higher pricing and the
favorable impact of currency translation.
EBITDA for the quarter was $129.7 million
or 23.6 percent of sales, compared with EBITDA
of $109.2 million or 23.4 percent of sales for
the same period a year ago. The increase in EBITDA was driven
primarily by the positive impact of higher volume and related
manufacturing utilization, positive price/mix, favorable currency
and lower restructuring charges, partially offset by higher
operating costs.
Excluding special items (detailed in the attached tables),
adjusted EBITDA in the quarter was $130.7 million
or 23.8 percent of sales, compared
with $115.2 million or 24.7 percent of sales in the
third quarter last year.
Mobile Industries sales of $487.3 million
increased 13.7 percent compared with the same period a year ago.
The increase was driven by higher shipments in the off-highway and
heavy truck sectors, higher pricing and the favorable impact of
currency translation, partially offset by lower revenue in the
automotive sector.
EBITDA for the quarter was $53.2 million
or 10.9 percent of sales, compared with EBITDA
of $64.0 million or 14.9 percent of sales for the
same period a year ago. The decrease in EBITDA reflects the impact
of higher operating costs, partially offset by the favorable impact
of higher volume and related manufacturing utilization, and
positive price/mix.
Excluding special items (detailed in the attached tables),
adjusted EBITDA in the quarter was $58.2 million
or 11.9 percent of sales, compared
with $68.4 million or 16.0 percent of sales in the
third quarter last year.
Outlook Commentary
"We expect operating conditions through the rest of the year to
be similar to the third quarter, with the benefits of strong demand
being largely offset by inflation and higher costs to serve
customers," said Kyle. "As we look out to 2022, we are planning for
the robust demand environment to continue, with supply chain issues
persisting through at least the early part of the year. We expect
to offset these headwinds with significant price realization and
operational excellence initiatives, and we are well positioned to
deliver higher levels of performance in 2022."
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:
|
Monday, November 1,
2021
|
|
11:00 a.m. Eastern
Time
|
|
Live Dial-In:
800-458-4121
|
|
Or +1
313-209-6672
|
|
(Call in 10 minutes
prior to be included.)
|
|
Conference ID:
Timken's 3Q Earnings Call
|
|
Or Click to Join:
https://tmkn.biz/3oH1n9V
|
|
|
Conference Call
Replay:
|
Replay Dial-In
available through
|
|
November 15,
2021:
|
|
888-203-1112 or
719-457-0820
|
|
Replay Passcode:
9232877
|
|
|
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 $3.5 billion in sales in 2020 and employs more
than 17,000 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
"Outlook Commentary," 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 third
quarter of 2021; the company's ability to respond to the changes in
its end markets that could affect demand for the company's products
or services; unanticipated changes in business relationships with
customers or their purchases from the company; changes in the
financial health of the company's customers, which may have an
impact on the company's revenues, earnings and impairment charges;
fluctuations in material and energy costs; logistical issues
associated with port closures or congestion, delays or increased
costs; the impact of changes to the company's accounting methods;
political risks associated with government instability; recent
world events that have increased the risks posed by international
trade disputes, tariffs and sanctions; weakness in global or
regional economic conditions and capital markets; the 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 meant to address climate change;
unanticipated litigation, claims, investigations or assessments;
the company's ability to maintain positive relations with unions
and works councils; negative impacts to the company's business,
results of operations, financial position or liquidity as a result
of COVID-19 or other epidemics and associated governmental measures
such as restrictions on travel and manufacturing operations; and
the company's ability to complete and achieve the benefits of
announced plans, programs, initiatives, acquisitions and capital
investments. Additional factors are discussed in the company's
filings with the Securities and Exchange Commission, including the
company's Annual Report on Form 10-K for the year ended
Dec. 31, 2020, quarterly reports on
Form 10-Q and current reports on Form 8-K. Except as required by
the federal securities laws, the company undertakes no obligation
to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise.
Media Relations:
Scott
Schroeder
234.262.6420
scott.schroeder@timken.com
Investor Relations:
Neil
Frohnapple
234.262.2310
neil.frohnapple@timken.com
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Timken
Company
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(Dollars in
millions, except share data) (Unaudited)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2021
|
2020
|
|
2021
|
2020
|
Net sales
|
$
|
1,037.3
|
|
$
|
894.6
|
|
|
$
|
3,125.6
|
|
$
|
2,621.5
|
|
Cost of products
sold
|
769.4
|
|
630.9
|
|
|
2,256.2
|
|
1,848.6
|
|
Gross
Profit
|
267.9
|
|
263.7
|
|
|
869.4
|
|
772.9
|
|
Selling, general
& administrative expenses
|
140.7
|
|
132.7
|
|
|
434.2
|
|
398.1
|
|
Impairment and
restructuring charges
|
2.9
|
|
12.0
|
|
|
8.2
|
|
18.7
|
|
Operating
Income
|
124.3
|
|
119.0
|
|
|
427.0
|
|
356.1
|
|
Non-service pension
and other postretirement income
|
0.5
|
|
15.3
|
|
|
5.9
|
|
13.4
|
|
Other income
(expense), net
|
1.5
|
|
(1.0)
|
|
|
0.3
|
|
1.1
|
|
Interest expense,
net
|
(14.3)
|
|
(15.4)
|
|
|
(43.3)
|
|
(49.3)
|
|
Income
Before Income Taxes
|
112.0
|
|
117.9
|
|
|
389.9
|
|
321.3
|
|
Provision for income
taxes
|
20.4
|
|
26.6
|
|
|
75.1
|
|
84.2
|
|
Net
Income
|
91.6
|
|
91.3
|
|
|
314.8
|
|
237.1
|
|
Less: Net
income attributable to noncontrolling interest
|
3.5
|
|
2.5
|
|
|
8.6
|
|
5.7
|
|
Net Income
Attributable to The Timken Company
|
$
|
88.1
|
|
$
|
88.8
|
|
|
$
|
306.2
|
|
$
|
231.4
|
|
|
|
|
|
|
|
Net Income per
Common Share Attributable to The Timken Company Common
Shareholders
|
|
|
|
|
|
Basic Earnings per
share
|
$
|
1.16
|
|
$
|
1.18
|
|
|
$
|
4.03
|
|
$
|
3.07
|
|
Diluted Earnings per
share
|
$
|
1.14
|
|
$
|
1.16
|
|
|
$
|
3.97
|
|
$
|
3.04
|
|
|
|
|
|
|
|
Average Shares
Outstanding
|
76,068,582
|
|
75,223,462
|
|
|
75,980,355
|
|
75,288,567
|
|
Average Shares
Outstanding - assuming dilution
|
77,023,973
|
|
76,286,136
|
|
|
77,157,614
|
|
76,131,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BUSINESS
SEGMENTS
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
September 30,
|
Nine Months
Ended
September 30,
|
(Dollars in
millions)
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
Mobile
Industries
|
|
|
|
|
Net sales
|
$
|
487.3
|
|
$
|
428.6
|
|
$
|
1,486.0
|
|
$
|
1,237.9
|
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA) (1)
|
$
|
53.2
|
|
$
|
64.0
|
|
$
|
200.1
|
|
$
|
177.9
|
|
EBITDA
Margin (1)
|
10.9
|
%
|
14.9
|
%
|
13.5
|
%
|
14.4
|
%
|
Process
Industries
|
|
|
|
|
Net sales
|
$
|
550.0
|
|
$
|
466.0
|
|
$
|
1,639.6
|
|
$
|
1,383.6
|
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA) (1)
|
$
|
129.7
|
|
$
|
109.2
|
|
$
|
401.9
|
|
$
|
343.0
|
|
EBITDA
Margin (1)
|
23.6
|
%
|
23.4
|
%
|
24.5
|
%
|
24.8
|
%
|
Unallocated corporate
expense
|
$
|
(11.7)
|
|
$
|
(10.6)
|
|
$
|
(34.9)
|
|
$
|
(28.2)
|
|
Corporate pension and
other postretirement benefit related (expense)
income (2)
|
(3.9)
|
|
11.9
|
|
(8.3)
|
|
3.1
|
|
Acquisition-related
gain (3)
|
0.3
|
|
—
|
|
0.9
|
|
—
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
Net sales
|
$
|
1,037.3
|
|
$
|
894.6
|
|
$
|
3,125.6
|
|
$
|
2,621.5
|
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA) (1)
|
$
|
167.6
|
|
$
|
174.5
|
|
$
|
559.7
|
|
$
|
495.8
|
|
EBITDA
Margin (1)
|
16.2
|
%
|
19.5
|
%
|
17.9
|
%
|
18.9
|
%
|
|
|
|
|
|
(1) EBITDA is a non-GAAP measure
defined as operating income plus other income (expense) and
excluding depreciation and amortization. EBITDA Margin is a
non-GAAP measure defined as EBITDA as a percentage of net sales.
EBITDA and EBITDA Margin are important financial measures used in
the management of the business, including decisions concerning the
allocation of resources and assessment of performance.
Management believes that reporting EBITDA and EBITDA Margin
is useful to investors as these measures are representative of the
core operations of the segments and Company,
respectively.
|
|
|
|
|
|
(2) Corporate pension and other
postretirement benefit related (expense) income 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 measurement period adjustments to the 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)
|
|
|
|
September 30,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
261.8
|
|
|
$
|
320.3
|
|
Restricted
cash
|
0.8
|
|
|
0.8
|
|
Accounts receivable,
net
|
700.2
|
|
|
581.1
|
|
Unbilled
receivables
|
85.7
|
|
|
110.9
|
|
Inventories,
net
|
974.1
|
|
|
841.3
|
|
Other current
assets
|
172.8
|
|
|
145.9
|
|
Total Current
Assets
|
2,195.4
|
|
|
2,000.3
|
|
Property, plant and
equipment, net
|
1,035.3
|
|
|
1,035.6
|
|
Operating lease
assets
|
109.8
|
|
|
118.2
|
|
Goodwill and other
intangible assets
|
1,714.4
|
|
|
1,789.0
|
|
Non-current pension
assets
|
4.0
|
|
|
2.0
|
|
Other
assets
|
86.7
|
|
|
96.5
|
|
Total
Assets
|
$
|
5,145.6
|
|
|
$
|
5,041.6
|
|
LIABILITIES
|
|
|
|
Accounts
payable
|
$
|
406.2
|
|
|
$
|
351.4
|
|
Short-term debt,
including current portion of long-term debt
|
39.0
|
|
|
130.7
|
|
Short-term operating
lease liabilities
|
25.7
|
|
|
27.2
|
|
Income
taxes
|
25.6
|
|
|
16.1
|
|
Accrued
expenses
|
349.5
|
|
|
322.6
|
|
Total Current
Liabilities
|
846.0
|
|
|
848.0
|
|
Long-term
debt
|
1,417.0
|
|
|
1,433.9
|
|
Accrued pension
benefits
|
162.2
|
|
|
163.0
|
|
Accrued
postretirement benefits
|
50.6
|
|
|
41.3
|
|
Long-term operating
lease liabilities
|
68.5
|
|
|
75.5
|
|
Other non-current
liabilities
|
224.9
|
|
|
254.7
|
|
Total
Liabilities
|
2,769.2
|
|
|
2,816.4
|
|
EQUITY
|
|
|
|
The Timken Company
shareholders' equity
|
2,296.9
|
|
|
2,152.9
|
|
Noncontrolling
interest
|
79.5
|
|
|
72.3
|
|
Total
Equity
|
2,376.4
|
|
|
2,225.2
|
|
Total Liabilities and
Equity
|
$
|
5,145.6
|
|
|
$
|
5,041.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(Dollars in
millions)
|
2021
|
2020
|
|
2021
|
2020
|
Cash Provided by
(Used in)
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
Net Income
|
$
|
91.6
|
|
$
|
91.3
|
|
|
$
|
314.8
|
|
$
|
237.1
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
41.3
|
|
41.2
|
|
|
126.5
|
|
125.2
|
|
Stock-based
compensation expense
|
3.1
|
|
7.8
|
|
|
15.6
|
|
19.2
|
|
Pension and other
postretirement benefit expense (income)
|
2.4
|
|
(12.1)
|
|
|
2.9
|
|
(3.9)
|
|
Pension and other
postretirement benefit contributions and payments
|
(3.2)
|
|
(4.3)
|
|
|
(18.2)
|
|
(12.9)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
(1.7)
|
|
(19.2)
|
|
|
(127.5)
|
|
(27.6)
|
|
Unbilled
receivables
|
14.7
|
|
(14.9)
|
|
|
25.1
|
|
(11.9)
|
|
Inventories
|
(62.8)
|
|
6.6
|
|
|
(144.2)
|
|
47.9
|
|
Accounts
payable
|
19.3
|
|
31.7
|
|
|
60.5
|
|
2.8
|
|
Accrued
expenses
|
19.4
|
|
44.1
|
|
|
50.2
|
|
49.4
|
|
Income
taxes
|
0.7
|
|
(18.1)
|
|
|
(6.7)
|
|
5.7
|
|
Other,
net
|
(19.0)
|
|
(0.5)
|
|
|
(14.4)
|
|
26.2
|
|
Net Cash Provided by
Operating Activities
|
$
|
105.8
|
|
$
|
153.6
|
|
|
$
|
284.6
|
|
$
|
457.2
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Capital
expenditures
|
$
|
(43.1)
|
|
$
|
(29.2)
|
|
|
$
|
(103.6)
|
|
$
|
(85.7)
|
|
Acquisitions, net of
cash received
|
(7.3)
|
|
—
|
|
|
(7.2)
|
|
(6.7)
|
|
Investments in
short-term marketable securities, net
|
8.4
|
|
(8.8)
|
|
|
(5.4)
|
|
(10.4)
|
|
Other, net
|
—
|
|
1.3
|
|
|
0.3
|
|
1.4
|
|
Net Cash Used in
Investing Activities
|
$
|
(42.0)
|
|
$
|
(36.7)
|
|
|
$
|
(115.9)
|
|
$
|
(101.4)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
Cash dividends paid
to shareholders
|
$
|
(22.8)
|
|
$
|
(21.1)
|
|
|
$
|
(69.5)
|
|
$
|
(65.0)
|
|
Purchase of treasury
shares
|
(30.3)
|
|
—
|
|
|
(56.6)
|
|
(42.3)
|
|
Proceeds from
exercise of stock options
|
—
|
|
10.7
|
|
|
25.4
|
|
18.2
|
|
Payments related to
tax withholding for stock-based compensation
|
—
|
|
(1.6)
|
|
|
(23.5)
|
|
(12.0)
|
|
Net payments from
credit facilities
|
(46.9)
|
|
(187.5)
|
|
|
(88.3)
|
|
(76.0)
|
|
Net payments on
long-term debt
|
(3.0)
|
|
(11.1)
|
|
|
(9.4)
|
|
(63.2)
|
|
Other, net
|
(0.5)
|
|
(15.8)
|
|
|
(0.5)
|
|
(17.4)
|
|
Net Cash Used in
Financing Activities
|
$
|
(103.5)
|
|
$
|
(226.4)
|
|
|
$
|
(222.4)
|
|
$
|
(257.7)
|
|
Effect of exchange
rate changes on cash
|
(4.0)
|
|
7.4
|
|
|
(4.8)
|
|
(0.3)
|
|
(Decrease) Increase
in Cash, Cash Equivalents and Restricted Cash
|
$
|
(43.7)
|
|
$
|
(102.1)
|
|
|
$
|
(58.5)
|
|
$
|
97.8
|
|
Cash, Cash
Equivalents and Restricted Cash at Beginning of Period
|
306.3
|
|
416.1
|
|
|
321.1
|
|
216.2
|
|
Cash, Cash
Equivalents and Restricted Cash at End of Period
|
$
|
262.6
|
|
$
|
314.0
|
|
|
$
|
262.6
|
|
$
|
314.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2021
|
|
EPS
|
2020
|
|
EPS
|
|
2021
|
|
EPS
|
2020
|
|
EPS
|
Net Income
Attributable to The Timken Company
|
$
|
88.1
|
|
|
$
|
1.14
|
|
$
|
88.8
|
|
|
$
|
1.16
|
|
|
$
|
306.2
|
|
|
$
|
3.97
|
|
$
|
231.4
|
|
|
$
|
3.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment, restructuring and
reorganization charges (2)
|
$
|
5.9
|
|
|
|
$
|
13.3
|
|
|
|
|
$
|
13.3
|
|
|
|
$
|
24.9
|
|
|
|
Corporate
pension and other postretirement benefit related expense
(income) (3)
|
3.9
|
|
|
|
(11.9)
|
|
|
|
|
8.3
|
|
|
|
(3.1)
|
|
|
|
Acquisition-related
charges (4)
|
1.5
|
|
|
|
(0.5)
|
|
|
|
|
2.1
|
|
|
|
3.7
|
|
|
|
Property
losses (recoveries) and related
expenses (5)
|
—
|
|
|
|
(1.7)
|
|
|
|
|
—
|
|
|
|
(3.8)
|
|
|
|
Noncontrolling interest of above
adjustments
|
—
|
|
|
|
—
|
|
|
|
|
0.2
|
|
|
|
—
|
|
|
|
Provision
for income taxes (6)
|
(8.4)
|
|
|
|
(1.6)
|
|
|
|
|
(26.3)
|
|
|
|
(5.0)
|
|
|
|
Total
Adjustments:
|
2.9
|
|
|
0.04
|
|
(2.4)
|
|
|
(0.03)
|
|
|
(2.4)
|
|
|
(0.03)
|
|
16.7
|
|
|
0.21
|
|
Adjusted Net Income
Attributable to The Timken Company
|
$
|
91.0
|
|
|
$
|
1.18
|
|
$
|
86.4
|
|
|
$
|
1.13
|
|
|
$
|
303.8
|
|
|
$
|
3.94
|
|
$
|
248.1
|
|
|
$
|
3.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 (income) 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
represent deal-related expenses associated with completed and
certain unsuccessful transactions, as well as any resulting
inventory step-up impact and measurement period adjustments to the
bargain purchase gain on the acquisition of the assets of Aurora
that closed on November 30, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Represents property loss and
related expenses during the period presented (net of insurance
recoveries received in 2020) resulting from property loss that
occurred during the first quarter of 2019 at one of the Company's
warehouses in Knoxville, Tennessee and during the third quarter of
2019 at one of the Company's warehouses in Yantai,
China.
|
|
(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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2021
|
Percentage
to
Net Sales
|
2020
|
Percentage
to
Net Sales
|
|
2021
|
Percentage
to
Net Sales
|
2020
|
Percentage
to
Net Sales
|
Net Income
|
$
|
91.6
|
|
8.8
|
%
|
$
|
91.3
|
|
10.2
|
%
|
|
$
|
314.8
|
|
10.1
|
%
|
$
|
237.1
|
|
9.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
20.4
|
|
|
26.6
|
|
|
|
75.1
|
|
|
84.2
|
|
|
Interest
expense
|
14.8
|
|
|
16.3
|
|
|
|
45.0
|
|
|
52.3
|
|
|
Interest
income
|
(0.5)
|
|
|
(0.9)
|
|
|
|
(1.7)
|
|
|
(3.0)
|
|
|
Depreciation and
amortization
|
41.3
|
|
|
41.2
|
|
|
|
126.5
|
|
|
125.2
|
|
|
Consolidated
EBITDA
|
$
|
167.6
|
|
16.2
|
%
|
$
|
174.5
|
|
19.5
|
%
|
|
$
|
559.7
|
|
17.9
|
%
|
$
|
495.8
|
|
18.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Impairment, restructuring and
reorganization charges (1)
|
$
|
5.6
|
|
|
$
|
13.1
|
|
|
|
$
|
12.5
|
|
|
$
|
22.1
|
|
|
Corporate
pension and other postretirement benefit related
expense
(income) (2)
|
3.9
|
|
|
(11.9)
|
|
|
|
8.3
|
|
|
(3.1)
|
|
|
Acquisition-related
charges (3)
|
1.5
|
|
|
(0.5)
|
|
|
|
2.1
|
|
|
3.7
|
|
|
Property
losses (recoveries) and related
expenses (4)
|
—
|
|
|
(1.7)
|
|
|
|
—
|
|
|
(3.8)
|
|
|
Total
Adjustments
|
11.0
|
|
1.0
|
%
|
(1.0)
|
|
(0.1)
|
%
|
|
22.9
|
|
0.7
|
%
|
18.9
|
|
0.7
|
%
|
Adjusted
EBITDA
|
$
|
178.6
|
|
17.2
|
%
|
$
|
173.5
|
|
19.4
|
%
|
|
$
|
582.6
|
|
18.6
|
%
|
$
|
514.7
|
|
19.6
|
%
|
|
|
|
|
|
|
|
|
|
|
(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 (income) 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
represent deal-related expenses associated with completed and
certain unsuccessful transactions, as well as any resulting
inventory step-up impact and measurement period adjustments to the
bargain purchase gain on the acquisition of the assets of Aurora
that closed on November 30, 2020.
|
|
(4) Represents property loss and
related expenses during the period presented (net of insurance
recoveries received in 2020) resulting from property loss that
occurred during the first quarter of 2019 at one of the Company's
warehouses in Knoxville, Tennessee and during the third quarter of
2019 at one of the Company's warehouses in Yantai,
China.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
segment EBITDA Margin, After Adjustments, to segment EBITDA as a
Percentage of Sales and segment EBITDA, After Adjustments, to
segment EBITDA:
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
The following
reconciliation is provided as additional relevant information about
the Company's Mobile Industries and Process Industries segment
performance deemed useful to investors. Management believes that
non-GAAP measures of adjusted EBITDA and adjusted EBITDA margin for
the segments are useful to investors as they are representative of
each segment's core operations and are used in the management of
the business, including decisions concerning the allocation of
resources and assessment of performance.
|
|
|
|
|
|
|
|
|
|
|
Mobile
Industries
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(Dollars in
millions)
|
2021
|
Percentage to Net
Sales
|
2020
|
Percentage to Net
Sales
|
|
2021
|
Percentage to Net
Sales
|
2020
|
Percentage to Net
Sales
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA)
|
$
|
53.2
|
|
10.9
|
%
|
$
|
64.0
|
|
14.9
|
%
|
|
$
|
200.1
|
|
13.5
|
%
|
$
|
177.9
|
|
14.4
|
%
|
Impairment, restructuring and
reorganization charges (1)
|
4.8
|
|
|
6.6
|
|
|
|
6.3
|
|
|
10.2
|
|
|
Acquisition-related
charges (2)
|
0.2
|
|
|
(0.5)
|
|
|
|
0.6
|
|
|
2.1
|
|
|
Property
losses (recoveries) and related
expenses (3)
|
—
|
|
|
(1.7)
|
|
|
|
—
|
|
|
(3.8)
|
|
|
Adjusted
EBITDA
|
$
|
58.2
|
|
11.9
|
%
|
$
|
68.4
|
|
16.0
|
%
|
|
$
|
207.0
|
|
13.9
|
%
|
$
|
186.4
|
|
15.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Process
Industries
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(Dollars in
millions)
|
2021
|
Percentage to Net
Sales
|
2020
|
Percentage to Net
Sales
|
|
2021
|
Percentage to Net
Sales
|
2020
|
Percentage to Net
Sales
|
Earnings before
interest, taxes, depreciation and amortization
(EBITDA)
|
$
|
129.7
|
|
23.6
|
%
|
$
|
109.2
|
|
23.4
|
%
|
|
$
|
401.9
|
|
24.5
|
%
|
$
|
343.0
|
|
24.8
|
%
|
Impairment, restructuring and
reorganization charges (1)
|
0.8
|
|
|
6.2
|
|
|
|
6.2
|
|
|
11.5
|
|
|
Acquisition-related
charges (2)
|
0.2
|
|
|
(0.2)
|
|
|
|
0.5
|
|
|
1.0
|
|
|
Adjusted
EBITDA
|
$
|
130.7
|
|
23.8
|
%
|
$
|
115.2
|
|
24.7
|
%
|
|
$
|
408.6
|
|
24.9
|
%
|
$
|
355.5
|
|
25.7
|
%
|
|
|
|
|
|
|
|
|
|
|
(1) Impairment, restructuring and
reorganization charges (including items recorded in cost of
products sold) relate to: (i) plant closures; (ii) the
rationalization of certain plants; and (iii) severance related to
cost reduction initiatives. The Company re-assesses its operating
footprint and cost structure periodically, and makes adjustments as
needed that result in restructuring charges. However,
management believes these actions are not representative of the
Company's core operations.
|
|
|
|
|
|
|
|
|
|
|
(2) The acquisition-related charges
represent the inventory step-up impact.
|
|
|
|
|
|
|
|
|
|
|
(3) Represents property loss and
related expenses during the period presented (net of insurance
recoveries received in 2020) resulting from property loss that
occurred during the first quarter of 2019 at one of the Company's
warehouses in Knoxville, Tennessee and during the third quarter of
2019 at one of the Company's warehouses in Yantai,
China.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Total Debt to Net Debt, the Ratio of Net Debt to Capital, and the
Ratio of Net Debt to Adjusted EBITDA:
|
(Unaudited)
|
|
|
|
|
These reconciliations
are provided as additional relevant information about the Company's
financial position deemed useful to investors. Capital, used for
the ratio of net debt to capital, is a non-GAAP measure defined as
total debt less cash and cash equivalents plus total shareholders'
equity. Management believes Net Debt, the Ratio of Net Debt to
Capital, Adjusted EBITDA (see below), 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)
|
|
|
|
|
|
|
|
September 30,
2021
|
December 31,
2020
|
Short-term debt,
including current portion of long-term debt
|
|
|
$
|
39.0
|
|
$
|
130.7
|
|
Long-term
debt
|
|
|
1,417.0
|
|
1,433.9
|
|
Total
Debt
|
|
|
$
|
1,456.0
|
|
$
|
1,564.6
|
|
Less: Cash and cash
equivalents
|
|
|
(261.8)
|
|
(320.3)
|
|
Net Debt
|
|
|
$
|
1,194.2
|
|
$
|
1,244.3
|
|
|
|
|
|
|
Total
Equity
|
|
|
$
|
2,376.4
|
|
$
|
2,225.2
|
|
Ratio of Net Debt to
Capital
|
|
|
33.4
|
%
|
35.9
|
%
|
|
|
|
|
|
Adjusted EBITDA for
the Twelve Months Ended
|
|
|
$
|
726.8
|
|
$
|
658.9
|
|
Ratio of Net Debt to
Adjusted EBITDA
|
|
|
1.6
|
|
1.9
|
|
|
|
|
|
|
Reconciliation of
Free Cash Flow to GAAP Net Cash Provided by Operating
Activities:
|
(Unaudited)
|
|
|
|
|
Management believes
that free cash flow is a non-GAAP measure that is useful to
investors because it is a meaningful indicator of cash generated
from operating activities available for the execution of its
business strategy.
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
Three Months
Ended
September 30,
|
Nine Months
Ended
September 30,
|
|
2021
|
2020
|
2021
|
2020
|
Net cash provided by
operating activities
|
$
|
105.8
|
|
$
|
153.6
|
|
$
|
284.6
|
|
$
|
457.2
|
|
Less: capital
expenditures
|
(43.1)
|
|
(29.2)
|
|
(103.6)
|
|
(85.7)
|
|
Free cash
flow
|
$
|
62.7
|
|
$
|
124.4
|
|
$
|
181.0
|
|
$
|
371.5
|
|
|
|
|
|
|
|
|
|
|
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
September 30, 2021
|
Twelve Months
Ended
December 31, 2020
|
Net Income
|
$
|
370.1
|
|
$
|
292.4
|
|
Provision for income
taxes
|
94.8
|
|
103.9
|
|
Interest
expense
|
60.3
|
|
67.6
|
|
Interest
income
|
(2.4)
|
|
(3.7)
|
|
Depreciation and
amortization
|
168.4
|
|
167.1
|
|
Consolidated
EBITDA
|
$
|
691.2
|
|
$
|
627.3
|
|
Adjustments:
|
|
|
Impairment, restructuring and
reorganization charges (1)
|
$
|
16.3
|
|
$
|
25.9
|
|
Corporate
pension and other postretirement benefit related
expense (2)
|
29.9
|
|
18.5
|
|
Acquisition-related
charges (3)
|
3.0
|
|
3.7
|
|
Acquisition-related
gain (4)
|
(12.0)
|
|
(11.1)
|
|
Gain on sale of
real estate
|
(0.4)
|
|
(0.4)
|
|
Property
losses (recoveries) and related
expenses (5)
|
(1.7)
|
|
(5.5)
|
|
Tax
indemnification and related items
|
0.5
|
|
0.5
|
|
Total Adjustments
|
35.6
|
|
31.6
|
|
Adjusted
EBITDA
|
$
|
726.8
|
|
$
|
658.9
|
|
|
|
|
(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.
|
|
|
|
(3) Acquisition-related charges
represent deal-related expenses associated with completed and
certain unsuccessful transactions, as well as any resulting
inventory step-up impact.
|
|
|
|
(4) The acquisition-related gain
represents a bargain purchase gain on the acquisition of the assets
of Aurora that closed on November 30, 2020.
|
|
|
|
(5) Represents property loss and
related expenses during the periods presented (net of insurance
recoveries received in 2020) resulting from property loss that
occurred during the first quarter of 2019 at one of the Company's
warehouses in Knoxville, Tennessee and during the third quarter of
2019 at one of the Company's warehouses in Yantai,
China.
|
|
|
|
|
|
|
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SOURCE The Timken Company