Timken Reports Third-Quarter 2023 Results
- Sales of $1.14 billion, up approximately 1 percent from last year
- Third-quarter earnings per share of $1.23; adjusted EPS of $1.55
- Strong cash from operations of $194 million; free cash flow of $151 million
- Updates 2023 outlook; now expects 2023 EPS of $5.60-$5.70, with adjusted EPS of $6.85-$6.95
North Canton, Ohio, Nov. 1, 2023 /PRNewswire/ -- The Timken Company (NYSE: TKR; www.timken.com), a global leader in engineered bearings and industrial motion products, today reported third-quarter 2023 sales of $1.14 billion, up 0.6 percent from the same period a year ago. The increase was driven by the benefit of acquisitions (net of divestitures), higher pricing, and favorable foreign currency translation, partially offset by lower volume.
Timken posted a net income in the third quarter of $87.9 million or $1.23 per diluted share. This compares to net income of $87.0 million or $1.18 per diluted share for the same period a year ago. Net income was 8.0 percent of sales in both periods.
Excluding special items (detailed in the attached tables), adjusted net income in the third quarter was $111.2 million or $1.55 per diluted share. This compares to an adjusted net income of $120.5 million or $1.63 per diluted share for the same period in 2022. Adjusted EBITDA in the quarter was $215.8 million or 18.9 percent of sales, compared with $213.6 million or 18.8 percent of sales in the third quarter of last year.
Net cash from operations for the quarter was $194.3 million, and free cash flow was $150.7 million. During the quarter, Timken repurchased 775 thousand shares of company stock or approximately 1 percent of outstanding shares. In total, the company returned $87.3 million of cash to shareholders through dividends and share repurchases in the third quarter.
The company completed two acquisitions during the quarter, Des-Case and Rosa Sistemi, both of which expanded the company's Industrial Motion product portfolio. And in October, Timken announced an agreement to acquire iMECH and the divestiture of TWB. Overall, the net impact of these four transactions will add nearly $50 million of pro forma annual revenue and will be accretive to company margins.
"Timken posted solid results in the quarter despite challenging business conditions across several sectors and geographies," said Richard G. Kyle, Timken's president and chief executive officer. "We executed well across the enterprise, as we expanded adjusted EBITDA margins in both segments and generated strong free cash flow. We also continued to deploy capital to strengthen our business and create sustained shareholder value, while maintaining a strong balance sheet."
Third-Quarter 2023 Segment Results
Engineered Bearings sales of $775.6 million decreased 0.5 percent from the same period a year ago. The decrease was driven by lower volume, partially offset by the benefit of acquisitions and higher pricing.
EBITDA for the quarter was $148.2 million or 19.1 percent of sales, compared with EBITDA of $150.4 million or 19.3 percent of sales for the same period a year ago. The modest decrease in EBITDA was driven primarily by the impact of lower volume, higher manufacturing costs, unfavorable foreign currency and higher impairment & restructuring charges, mostly offset by lower material & logistics costs, favorable price/mix and the benefit of acquisitions.
Excluding special items, adjusted EBITDA in the quarter was $156.7 million or 20.2 percent of sales, compared with $153.8 million or 19.7 percent of sales in the third quarter of last year.
Industrial Motion sales of $367.1 million increased 2.9 percent compared with the same period a year ago. The increase was driven by the benefit of acquisitions (net), higher pricing and favorable foreign currency translation, partially offset by lower volume.
EBITDA for the quarter was $70.3 million or 19.2 percent of sales, compared with EBITDA of $34.9 million or 9.8 percent of sales for the same period a year ago. The increase in EBITDA was driven primarily by significantly lower impairment charges, favorable price/mix, and lower material & logistics costs, partially offset by lower volume.
Excluding special items, adjusted EBITDA in the quarter was $75.2 million or 20.5 percent of sales, compared with $68.0 million or 19.1 percent of sales in the third quarter of last year.
2023 Outlook
Timken is updating its 2023 outlook, with full-year earnings per diluted share now forecasted to be in the range of $5.60 to $5.70 and adjusted earnings per diluted share in the range of $6.85 to $6.95. The company is now planning for 2023 revenue to be up 5 to 5.5 percent in total from 2022.
"We have updated our outlook to reflect softer end-market demand conditions and our expectation for continued channel inventory reductions in the fourth quarter," said Kyle. "We are taking steps to bring costs in line with the expected volume levels and deliver a solid finish to the year. We remain on track for 2023 to mark all-time record sales and earnings with another year of improved margins. And we remain committed to advancing our long-term strategy to scale Timken as a diversified industrial leader and consistently grow the revenue and earnings of the company."
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: Wednesday, November 1, 2023, 11:00 a.m. Eastern Time
Live Dial-In: +1-833-470-1428 Or +1-404-975-4839
Access Code: 533023
(Call in 10 minutes prior to be included.)
Conference Call Replay: Replay Dial-In is available through November 15, 2023: +1-866-813-9403 or +1-929-458-6194
Replay Passcode: 470841
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 industrial motion 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 $4.5 billion in sales in 2022 and employs more than 19,000 people globally, operating from 46 countries. Timken has been recognized among America's Most Responsible Companies by Newsweek, the World's Most Ethical Companies® by Ethisphere, America's Most Innovative Companies by Fortune and America's Best Large Employers, Best Employers for New Graduates, and Best Employers for Women by Forbes.
Media Relations:
Scott Schroeder
+1-234-262-6420
scott.schroeder@timken.com
Investor Relations:
Neil Frohnapple
+1-234-262-2310
neil.frohnapple@timken.com
SOURCE The Timken Company
