Timken Reports Strong Second-Quarter 2023 Results
Record sales of $1.27 billion, up 10 percent from last year
Second-quarter EPS of $1.73; adjusted EPS of $2.01
Net income margin of 9.8 percent; adjusted EBITDA margin of 20.7 percent
Repurchased 1.3 million shares during the quarter
Updates 2023 outlook; now expects 2023 EPS of $5.70-$6.10, with adjusted EPS of $6.90-$7.30
The Timken Company (NYSE: TKR; www.timken.com), a global leader in engineered bearings and industrial motion products, today reported second-quarter 2023 sales of $1.27 billion, up 10.3 percent from the same period a year ago. The increase was driven by the benefit of acquisitions (net of divestitures) and continued organic growth in both segments led by Industrial Motion, partially offset by unfavorable foreign currency translation.
Timken posted net income in the second quarter of $125.2 million or $1.73 per diluted share, a record for the second quarter. This compares to net income of $105.0 million or $1.42 per diluted share for the same period a year ago.
Excluding special items (detailed in the attached tables), adjusted net income in the second quarter was $146.1 million or $2.01 per diluted share, a record for the second quarter. This compares to adjusted net income of $131.8 million or $1.78 per diluted share for the same period in 2022. Adjusted EBITDA in the quarter was $263.0 million or 20.7 percent of sales, compared with $231.2 million or 20.0 percent of sales in the second quarter of last year.
Net cash from operations for the quarter was $144.0 million and free cash flow was $94.4 million. During the quarter, Timken repurchased approximately 1.3 million shares of company stock, or nearly 2 percent of outstanding shares, and increased its quarterly dividend by 6 percent. In total, the company returned $124.3 million of cash to shareholders through dividends and share repurchases during the second quarter. In April, Timken closed on the previously announced acquisition of Nadella Group, and in June, the company completed the sale of a portion of its controlling stake in Timken India Limited.
"Timken delivered strong results in the second quarter, achieving double-digit sales and earnings growth and year-over-year margin expansion," said Richard G. Kyle, Timken president and chief executive officer. "Our performance reflects improved operational execution across the enterprise and the continued positive impact of our strategic growth and capital allocation initiatives."
Second-Quarter 2023 Segment Results
Engineered Bearings sales of $857.2 million increased 7.4 percent from the same period a year ago. The increase was driven by the benefit of acquisitions and modest organic growth, partially offset by unfavorable foreign currency translation.
EBITDA for the quarter was $185.5 million or 21.6 percent of sales, compared with EBITDA of $167.5 million or 21.0 percent of sales for the same period a year ago. The increase in EBITDA was driven primarily by the impact of favorable price/mix and lower material & logistics costs, as well as the benefit of acquisitions and lower Russia-related charges, partially offset by higher manufacturing costs and the impact of lower volume.
Excluding special items, adjusted EBITDA in the quarter was $189.6 million or 22.1 percent of sales, compared with $176.6 million or 22.1 percent of sales in the second quarter of last year.
Industrial Motion sales of $415.1 million increased 16.8 percent compared with the same period a year ago. The increase was driven by strong organic growth led by the drive systems and services platforms, as well as the benefit of acquisitions (net).
EBITDA for the quarter was $80.9 million or 19.5 percent of sales, compared with EBITDA of $65.1 million or 18.3 percent of sales for the same period a year ago. The increase in EBITDA was driven primarily by the impact of favorable price/mix and higher volume, partially offset by higher SG&A costs.
Excluding special items, adjusted EBITDA in the quarter was $85.9 million or 20.7 percent of sales, compared with $67.4 million or 19.0 percent of sales in the second quarter of last year.
Timken is updating its 2023 outlook, with full-year earnings per diluted share now forecasted to be in the range of $5.70 to $6.10 and adjusted earnings per diluted share in the range of $6.90 to $7.30. The company is now planning for 2023 revenue to be up approximately 8 percent in total at the midpoint from 2022.
"We have updated our outlook to reflect current order trends and continued near-term economic uncertainty," said Kyle. "Macro drivers remain constructive across most of the markets we serve, and Timken is on track to deliver all-time record results in 2023. Looking ahead, we will continue to focus on advancing our proven strategy to drive profitable growth and resilient performance."
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.
Thursday, August 3, 2023
11:00 a.m. Eastern Time
Live Dial-In: 833-470-1428
Access Code: 023620
(Call in 10 minutes prior to be included.)
Conference Call Replay:
Replay Dial-In available through
August 17, 2023:
866-813-9403 or 929-458-6194
Replay Passcode: 189497
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