Timken Reports Record First-Quarter 2021 Results; Raises Full-Year Outlook

 

  • Posted record sales of $1.03 billion, up 11 percent from last year
  • Delivered strong earnings per diluted share of $1.47 on a GAAP basis, with record adjusted earnings per diluted share of $1.38
  • Raises earnings outlook on strengthening markets; now expects 2021 earnings per diluted share of $5.00-$5.30 on a GAAP basis, with adjusted EPS of $5.15 to $5.45

The Timken Company, a global industrial leader in engineered bearings and power transmission products, today reported first-quarter 2021 sales of $1.03 billion, up 11 percent from the same period a year ago. The increase was driven by organic growth across most end-market sectors led by renewable energy and off-highway, as well as the benefit of currency translation and the Aurora Bearing acquisition. First quarter sales were up 15 percent from the fourth quarter.

Timken posted net income of $113.3 million or $1.47 per diluted share in the first quarter, versus net income of $80.7 million or $1.06 per diluted share for the same period a year ago. The year-over-year increase was primarily driven by higher volume, favorable manufacturing performance and lower selling, general and administrative (SG&A) expenses, partially offset by unfavorable mix and higher material and logistics costs. The current period also benefited from a lower tax rate driven by discrete tax benefits.

Excluding special items (detailed in the attached tables), adjusted net income in the first quarter was $106.7 million or a record $1.38 per diluted share, versus adjusted net income of $84.7 million or $1.11 per diluted share for the same period in 2020.

During the quarter, Timken returned $50.1 million of cash to shareholders with the payment of its 395th consecutive quarterly dividend and the repurchase of 350 thousand shares of company stock. The company ended the first quarter with net debt to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) at 1.9 times.

“We posted an outstanding first quarter, achieving double-digit revenue growth, margin expansion and record adjusted earnings per share despite supply chain challenges and cost headwinds,” said Richard G. Kyle, Timken president and chief executive officer. “Our strong operational execution and diverse, market-leading portfolio are delivering record results, while we continue to invest in our long-term profitable growth.”

First-Quarter 2021 Segment Results

Process Industries sales of $520.9 million increased 14.1 percent from the same period a year ago. The increase was driven mainly by organic growth in the renewable energy, distribution and general industrial sectors and the benefit of currency translation, offset partially by lower marine revenue.

EBITDA for the quarter was $131.0 million or 25.1 percent of sales, compared with EBITDA of $107.5 million or 23.5 percent of sales for the same period a year ago. The increase in EBITDA was driven primarily by higher volume, favorable manufacturing performance, lower SG&A expenses and the benefit of currency, partially offset by unfavorable mix and higher material and logistics costs.

Excluding special items (detailed in the attached tables), adjusted EBITDA in the quarter was $135.7 million or 26.0 percent of sales, compared with $111.5 million or 24.4 percent of sales in the first quarter last year.

Mobile Industries sales of $504.5 million increased 8.1 percent compared with the same period a year ago. The increase was driven mainly by organic growth in the off-highway, heavy truck and automotive sectors and the favorable impact of currency translation, partially offset by lower revenue in the rail and aerospace sectors.

EBITDA for the quarter was $79.6 million or 15.8 percent of sales, compared with EBITDA of $75.1 million or 16.1 percent of sales for the same period a year ago. The increase in EBITDA reflects higher volume and lower SG&A expenses, partially offset by unfavorable mix and higher material and logistics costs.

Excluding special items (detailed in the attached tables), adjusted EBITDA in the quarter was $80.1 million or 15.9 percent of sales, compared with $76.0 million or 16.3 percent of sales in the first quarter last year.

2021 Outlook

Timken now anticipates 2021 earnings per diluted share to range from $5.00 to $5.30 for the full year on a GAAP basis. Excluding special items (detailed in the attached tables), the company now expects 2021 adjusted earnings per diluted share of $5.15 to $5.45, which represents nearly 30 percent adjusted earnings growth versus 2020 at the midpoint. The company now expects 2021 revenue to be up approximately 18 percent at the midpoint in total versus 2020, which is up from the prior outlook of approximately 12 percent growth.

“We are raising our full-year outlook to reflect the robust and improving market conditions as well as our strong operational execution,” said Kyle. “Our outgrowth initiatives are contributing to our positive 2021 outlook, as we continue to win new business with our differentiated products and engineering innovation. We anticipate strong margin performance again this year, despite supply chain and other cost challenges. Overall, we are on track to deliver record results and we remain focused on executing our strategy to win in the marketplace and deliver higher performance for shareholders.”

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, April 28, 2021
11:00 a.m. Eastern Time
Live Dial-In: 800-458-4121
Or +1 323-209-6672
(Call in 10 minutes prior to be included.)
Conference ID: Timken’s 1Q Earnings Call
Or Click to Join: https://tmkn.biz/3dvEorg

Conference Call Replay:
Replay Dial-In available through
May 12, 2021:
888-203-1112 or 719-457-0820
Replay Passcode: 7139853

Live Webcast: http://investors.timken.com

 

Contact:
Scott Schroeder
234.262.6420
scott.schroeder@timken.com