Timken Announces Third Quarter Results
Resource from: CBCC Likes:2995
Oct 24,2003
The Timken Company (NYSE: TKR) today announced results for the third quarter, which were in line with earnings guidance.
For the quarter ended September 30, sales increased 50 percent to $938.0 million from $628.6 million a year ago, due primarily to the acquisition of The Torrington Company. Excluding the effects of Torrington, sales were up 5 percent.
In the third quarter, the company reported a net loss of $1.3 million, or a loss of $0.01 per diluted share. The third quarter included net expense of $0.05 per share for restructuring and integration activities related to the acquisition of Torrington. Excluding these special items, adjusted net income was $3.6 million or $0.04 per diluted share, within earnings guidance of $0.00 to $0.05 per share. Third-quarter performance benefited from higher revenues but was negatively affected by a decline in North American automobile production, continued issues impacting the performance of manufacturing in the Automotive Group and high raw material and natural gas costs affecting the Steel Group.Excluding the effects of the company's acquisition of Torrington and special items, Timken estimates adjusted third quarter earnings would have been $0.11 per diluted share. For the year, the company continues to expect the acquisition to be neutral to slightly accretive.For the third quarter of 2002, the company reported net income of $1.8 million or $0.03 per diluted share. Excluding charges for restructuring and reorganization, adjusted net income for the third quarter of 2002 was $10.6 million or $0.17 per diluted share.
"While we achieved sales increases in challenging markets, we recognize the need to improve our earnings performance," said James W. Griffith, president & CEO. "Despite reports of a strengthening economy in the U.S., we continue to suffer the effects of slow recovery in key markets as well as higher raw material and energy costs. We have taken steps to reduce our cost structure as part of our ongoing operations improvement programs, and we reduced debt. Additionally, the integration of Timken and Torrington has produced approximately $15 million in pretax savings to date, and we expect to achieve our target of $20 million of annualized pretax savings by year-end and $80 million by 2005."
During the quarter the company announced changes in its Automotive Group to drive improvements in manufacturing operations and better leverage the combination of Timken and Torrington. The company also announced it was reducing employment by more than 900 positions in the second half of 2003, and approximately 540 positions have been eliminated to date.
Total debt at the end of the third quarter was $939 million, down $78 million from the second quarter.
In the third quarter, Timken contributed $101 million to its domestic pension plans, with year-to-date cash contributions to these plans now totaling $169 million. Also during the quarter, the company sold its interest in a needle bearing manufacturing joint venture with NSK Ltd. for $146 million before taxes.
In October, the company completed a public offering of approximately 12.9 million shares of its common stock. This included approximately 9.4 million shares held by Ingersoll-Rand Company, which it received as part of the purchase price for Torrington, and 3.5 million shares sold by Timken. The company used the net proceeds of approximately $55 million from the sale of the 3.5 million shares to further reduce debt.
"Our debt reduction actions underscore our commitment to maintain a strong balance sheet," said Mr. Griffith. "We will continue to take actions to increase profitability and to generate cash through improved working capital management, focused capital expenditures and asset dispositions."
In the first nine months, sales were $2.8 billion, compared with $1.9 billion in 2002. The company reported earnings of $0.17 per diluted share for the first nine months of 2003 versus earnings of $0.04 in 2002. The first nine months of 2002 included a goodwill impairment write-off of $0.21 per diluted share for the cumulative effect of a change in accounting principle.
Excluding special items, the company had adjusted earnings of $0.40 per diluted share for the first nine months versus $0.68 in 2002. Excluding the effects of the Torrington acquisition and special items, sales for the first nine months were $2.0 billion, up 7 percent over 2002, and adjusted earnings were $0.51 per diluted share.
The segment results that follow exclude special charges for all periods. They also reflect for all periods a reorganization of the Automotive and Industrial Groups that occurred in the first quarter of 2003. Automotive distribution operations are now reported as part of the Industrial Group. Additionally, company sales to emerging markets -- principally in central and eastern Europe and Asia--previously were reported as part of the Industrial Group. Emerging market sales to automotive original equipment manufacturers are now included in the Automotive Group. Automotive Group ResultsFor the third quarter, Automotive Group sales were $346.8 million, compared with $184.7 million a year ago, with most of the increase due to the Torrington acquisition and new product introductions.The Automotive Group recorded a third-quarter loss of $8.5 million before interest and taxes versus a loss of $4.1 million a year ago. Excluding Torrington, third quarter sales were $194.8 million, and the Automotive Group recorded a loss of $4.8 million before interest and taxes.Automotive Group performance reflected growth in its traditional Timken(R) tapered roller bearing business, offset by lower sales in the former Torrington(R) needle bearing business. Demand for Timken tapered roller bearing products grew approximately 5 percent over the prior year, despite an estimated 2 percent decline in North American light truck production and an 11 percent drop in medium and heavy truck production. The growth in Timken product sales was fueled by new product introductions for light trucks. Torrington product sales were negatively impacted by an estimated 20 percent decline in passenger car production by the Big 3 automobile makers, compared with the prior year. Automotive results also were negatively affected by new process start-up costs associated with Advanced Green Components, a manufacturing joint venture to produce hot-forged, cold-forged and machined rings used in bearing manufacture. During the quarter, the Automotive Group continued to sharpen its focus on aggressive implementation of plans and tactics to improve manufacturing performance.For the first nine months, Automotive Group sales were $1.0 billion, compared with $564.1 million in the same period in 2002. Earnings before interest and taxes (EBIT) were $7.4 million, compared with $3.4 million in 2002. Excluding the effects of the Torrington acquisition, the Automotive Group had sales of $610.9 million and a loss of $2.6 million in the first nine months of 2003. Industrial Group ResultsIndustrial Group sales in the third quarter were $386.5 million, compared with $239.7 million in 2002. The sales increase reflected the addition of Torrington, the effect of currency translation and growth in certain markets.EBIT was $35.1 million, compared with $24.3 million a year earlier. Excluding Torrington, sales were $262.4 million and EBIT was $31.5 million. The Industrial Group benefited from continued growth in the automotive distribution business, improved performance in the rail business and in Europe, exiting of low-margin business and manufacturing cost reductions. Continuing weakness in industrial markets and high levels of distributor inventories for Torrington industrial products dampened the positive impact of these factors.
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1.The news above mentioned with detailed source are from internet.We are trying our best to assure they are accurate ,timely and safe so as to let bearing users and sellers read more related info.However, it doesn't mean we agree with any point of view referred in above contents and we are not responsible for the authenticity. If you want to publish the news,please note the source and you will be legally responsible for the news published.
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