Timken Reports Record Second-Quarter 2022 Results; Raises Full-Year Earnings Outlook

 

  • Record sales of $1.15 billion, up 11 percent organically from last year
  • Record second-quarter earnings per diluted share of $1.42 on a GAAP basis, with all-time record quarterly adjusted EPS of $1.67
  • Raises earnings outlook; now expects 2022 GAAP earnings per diluted share of $5.15 to $5.45 and adjusted EPS of $5.50 to $5.80

The Timken Company, a global industrial leader in engineered bearings and power transmission products, today reported record second-quarter 2022 sales of $1.15 billion, up 8.5 percent 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 percent versus the prior year.

Timken posted net income in the second quarter of $105.0 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 (detailed in the attached tables), as 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 thousand shares of company stock. In addition, the company raised its quarterly dividend by 3 percent 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, 2022, 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.”

Second-Quarter 2022 Segment Results

Process Industries sales of $610.1 million increased 7.3 percent from the same period a year ago. The increase was driven primarily by growth across most sectors led by distribution and general industrial, and the impact of higher pricing, partially offset by unfavorable currency and lower revenue in the renewable energy sector.

EBITDA for the quarter was $163.5 million or 26.8 percent of sales, compared with EBITDA of $141.2 million or 24.8 percent of sales for the same period a year ago. The increase in EBITDA was driven primarily by positive price/mix and the favorable impact of higher volume, partially offset by higher operating costs.

Excluding special items (detailed in the attached tables), adjusted EBITDA in the quarter was $164.5 million or 27.0 percent of sales, compared with $142.2 million or 25.0 percent of sales in the second quarter last year.

Mobile Industries sales of $543.6 million increased 10 percent compared with the same period a year ago. The increase was driven primarily by higher shipments across most sectors led by off-highway, and the impact of higher pricing, partially offset by unfavorable currency.

EBITDA for the quarter was $69.1 million or 12.7 percent of sales, compared with EBITDA of $67.3 million or 13.6 percent of sales for the same period a year ago. The increase in EBITDA reflects positive price/mix and the favorable impact of higher volume, partially offset by higher operating costs and Russia-related charges (described in the attached tables).

Excluding special items (detailed in the attached tables), adjusted EBITDA in the quarter was $79.5 million or 14.6 percent of sales, compared with $68.7 million or 13.9 percent of sales in the second quarter last year.

2022 Outlook

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 percent 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.”

 


Gruetzner