Timken Reports Record Sales, Earnings

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NORTH CANTON, Ohio — The Timken Company, a global leader in engineered bearings and power transmission products, on Thursday reported record second-quarter sales of $1.15 billion, up 8.5% 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% versus the prior year.

Timken posted net income in the second quarter of $105 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 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 750,000 shares of company stock. In addition, the company raised its quarterly dividend by 3% 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, 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."

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% 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."

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