Supplier Earnings Roundup: Sales Soar At Kennametal, Timken, Eaton Hydraulics

We're in the midst of another fiscal earnings reporting period, with many publicly-traded industrial distributors and suppliers posting their latest quarterly performance figures. Here's a roundup of the key numbers posted by suppliers Kennametal, Timken, Eaton, SKF and Emerson.

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Another quarterly fiscal earnings reporting period is nearing its end, with many well-known industrial distributors and suppliers posting their latest quarterly performance figures. Here's a roundup of the key numbers posted by Timken, Kennametal, Eaton, SKF and Emerson.

Kennametal

Pittsburg, PA-based industrial tooling and industrial materials supplier Kennametal reported its 2018 third quarter financial results on Thursday, showing that Q3 sales of $608 million increased 15.9 percent year-over-year (YoY). The company said organic sales grew 11 percent. Kennametal posted a Q3 total profit of $51 million, compared to $39 million a year earlier. Q3 operating profit of $85 million increased by $27 million, while operating margin of 14.0 percent was three percentage points higher.

By business segment in Q3:

  • Industrial sales of $333 million increased 15 percent YoY, with organic sales up 10 percent. Operating profit of $53 million increased $12 million, while operating margin of 15.9 percent was 2.6-points higher.
  • Widia sales of $52 million increased 13 percent YoY, with organic sales up 9 percent. Operating profit of $2 million doubled from a year earlier, while operating margin of 3.1 percent was 1.8-points higher.
  • Infrastructure sales of $223 million increased 15 percent YoY, with organic sales up 14 percent. Operating profit of $32 million increased $12 million, while operating margin of 14.3 percent was 4-points higher.

"Our end markets are robust, and the work we are doing on our three initiatives — growth, simplification and modernization — is driving improvements to results and margins," Kennametal president and CEO Chris Rossi said. "We are intensely focused on executing our multi-year plan. We are aggressively pursuing our simplification efforts and starting to get traction on the execution of our modernization initiatives, which contributed to our strong results. We expect to see increased benefits from these initiatives going forward in line with our multi-year plan. In addition, even in the face of rising raw material costs, price realization outpaced raw material cost inflation, and we expect to sustain that trend for the fiscal year."

Kennametal forecasts organic full-year 2018 sales growth of 9 to 11 percent.

Timken

North Canton, OH-based bearings maker Timken posted its 2018 first quarter financial results on Tuesday, showing that Q1 sales of $883.1 million jumped 25.5 percent YoY, which the company said was driven by strong organic growth across all markets, led by industrial distribution and off-highway. Timken's Q1 total profit of $80.2 million was up $42 million from a year earlier; operating profit of $116.1 million nearly doubled ($62.9 million); and gross profit of $264.9 million grew $82.7 million. EBIT of $81.6 million grew $37.5 million.

By business segment in Q1:

  • Mobile Industries sales of $488.5 jumped 27.5 percent YoY, with 11.3 percent of that due to acquisitions. Excluding acquisitions, sales grew 16.2 percent, driven primarily by higher demand in off-highway, heavy truck and rail sectors.
  • Process Industries sales of $394.6 million increased 23 percent YoY, driven by demand across industrial sectors — including distribution — original equipmetn and services.

"We achieved excellent first-quarter results, reporting strong revenue and earnings growth with expanded margins," said Timken president and CEO Richard Kyle. "Over the last several years, we have grown our portfolio organically and through acquisition, expanded our geographic reach and improved our cost structure.  As a result of these strategic actions, we are winning with our customers and outgrowing our markets."

Timken said it raised its full-year 2018 sales outlook, now expecting revenue to be up 17 percent YoY, with organic growth of 12 percent. Timken expects organic sales to increase 17 percent in both Mobile Industries and Process Industries.

Eaton

Dublin, Ireland-based Eaton reported its 2018 first quarter fiscals on Tuesday, showing that sales of $5.3 billion increased 8 percent YoY, with organic sales up 6 percent. The company posted a total profit of $488 million, up $13 million from a year earlier.

By business segment in Q1:

  • Hydraulics sales of $710 million increased 21 percent YoY, with organic sales up 16 percent. Operating profit of $90 million increased 50 percent, with operating margin of 12.7 percent up 250 basis points. The company said Hydraulic orders grew 14 percent, with solid growth in all geographic areas and particular strength in order from OEMs.
  • Electrical Systems and Services sales of $1.4 billion increased 4 percent YoY, with organic sales up 2 percent. Operating profit of $167 million grew 8 percent.
  • Aerospace sales of $458 million increased 7 percent YoY, with organic sales up 6 percent. Operating profit of $89 million grew 13 percent.
  • Vehicle sales of $893 million increased 14 percent, with organic sales up 13 percent. Operating profit increased 22 percent.
  • eMobility (launched in Q1) sales of $77 million increased 22 percent YoY, with organic sales up 19 percent. Operating profit of $11 million was flat.

SKF

Gothenberg, Sweden-based bearings maker SKF reported its 2018 first quarter fiscals on April 26, showing that sales of $2.31 billion grew 4.9 percent YoY, with organic sales up 7.5 percent. Local-currency organic sales grew 3.2 percent in North America; 7.6 percent in Europe; 13.2 percent in Asia/Pacific; 13.0 percent in Middle East & Africa; and 0.7 percent in Latin America. Total profit of $200 million grew $30 million from a year earlier; operating profit of $308 million grew $48 million; and operating margin of 12.8 percent grew from 11.7 percent a year earlier. The company's total sales and operating profit were both company records.

By business segment in Q1:

  • Industrial sales of $1.6 billion increased 6.0 percent YoY, with organic sales up 8.5 percent and operating profit of $240 million up by $30 million. Operating margin of 15 percent grew 1 percentage point. In local currencies, Industrial organic sales were up considerably in Europe, but relatively unchanged in North America. By industry in North America, sales to industrial drives, agricultural, food and beverage and other industrial were significantly higher; sales to aerospace here higher; sales to heavy industries and industrial distribution were unchanged; while sales to energy were significantly lower.
  • Automotive sales of $710 million increased 2.9 percent YoY, with organic sales up 5.5 percent.

"The actions we have taken to control and continually review our cost base, increase prices and focus on meeting the specific application needs of our customers are showing results," said SKF president and CEO Alrik Danielson. "Entering the second quarter 2018, we expect to see continued growth year-on-year, in all regions and we expect growth within both industrial and automotive."

Emerson

St. Louis-based automation technology products maker Emerson reported its 2018 second quarter fiscals on Tuesday, showing that sales of $4.2 billion increased 19 percent YoY, with organic sales up 8 percent. Total profit of $482 million jumped 65 percent.

By business segment in Q2:

  • Automation Solutions sales of $2.77 billion increased 31 percent YoY, with organic sales up 10 percent. Organic sales grew 16 percent in North America, with particular strength in oil and gas and chemical markets. The company growth continued to reflect strong short cycle MRO demand and small/mid-sized projects focused on expansion and optimization of existing facilities. The segment saw growth in all key process verticles.
  • Commercial & Residential Solutions sales of $1.48 billion increased 2 percent YoY, with organic sales up 4 percent. Organic sales grew 1 percent in North America, as strong demand for professional tools was offset by unexpected weaker air conditioning demand.

Emerson expects full year 2018 sales growth of approximately 13 percent YoY (7 percent organic), with Automation Solutions growing 20 percent (8 percent organic) and Commercial & Residential Solutions growing 2 percent (5 percent organic).

 

See our previous Earnings Roundup from April 25 here, covering Parker Hannifin, Rockwell Automation, Ingersoll Rand, Illinois Tool Works, Anixter International, Praxair and National Oilwell Varco.

Is there a publicly-traded supplier not included here you'd like to see the financial figures for? Let us know in the comments or email editor Mike Hockett at mike.hockett@advantagemedia.com

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