Bearings and power transmission solutions manufacturer Timken reported its 2020 third quarter financial results on Thursday, showing that while year-over-year sales were still down, it was by a much smaller margin than in Q2.
The North Canton, OH-based company posted Q3 total sales of $895 million, down 2.1 percent year-over-year (YoY) and up 11.3 percent from Q2. Organic sales were down 5.1 percent YoY, compared to a 20.1 percent plunge in Q2. Timken said the YoY decline was driven by lower demand in most end markets, partially offset by significant growth in renewable energy and the favorable impact of acquisitions.
Q2 gross profit of $264 million was down 5.0 percent YoY and operating profit of $119 million fell 7.0 percent, while total profit of $89 million jumped 38.3 percent. Sequentially, net profit increased 43.5 percent.
In the third quarter, Timken posted net income of $88.8 million or $1.16 per diluted share, versus net income of $64.2 million or $0.84 per diluted share for the same period a year ago. The year-over-year increase was driven primarily by pension remeasurement income, lower operating expenses reflecting the impact of cost reduction initiatives, favorable manufacturing performance and a lower tax rate, partially offset by the unfavorable impact of lower volume, price/mix and currency, and higher restructuring charges.
"We are pleased with our performance in the third quarter," said Richard G. Kyle, Timken president and chief executive officer. "Our markets continued to recover from the April trough, and with our strong execution, revenue exceeded our expectations and approached last year's level," said Richard Kyle, Timken president and CEO. "Additionally, our strategy to diversify our portfolio and increase our presence in sectors like renewable energy is contributing to our top-line performance in 2020."
By Timken business segment in Q3:
- Process Industries sales of $466 million increased 1.5 percent YoY and 1.1 percent from Q1. The year-over-year increase was driven primarily by strong growth in renewable energy, positive pricing and the benefit of acquisitions, partially offset by lower revenue across most other sectors.
- Mobile Industries sales of $429 million decreased 5.8 percent YoY but jumped 25.1 percent from Q1. The YoY decline was driven primarily by lower shipments across most sectors, partially offset by the benefit of acquisitions.
Timken said it expects the growing renewable energy market to comprise about 12 percent of the company's total sales in 2020.