Timken Announces Record First Quarter Sales
Resource from: www.timken.com Likes:2985
Apr 23,2004
Record Quarterly Sales of $1.1 billion
Strong Earnings Improvement Over Last Year's First Quarter
The Timken Company (NYSE: TKR) today reported record sales of $1.1 billion for the first quarter of 2004, an increase of 31 percent from the prior year. Adjusted to include pro forma results for Torrington for the full first quarter of 2003, sales were up 11 percent. Sales were higher across all three business groups, Automotive, Industrial and Steel, compared to the first quarter of 2003. Timken completed its $840 million strategic acquisition of The Torrington Company on February 18, 2003.
Timken reported $0.32 per diluted share, more than double the $0.15 per diluted share from a year ago. Excluding special items, adjusted earnings per share were $0.31, or 63 percent higher than the $0.19 last year. This compared favorably to previous company estimates of $0.25 to $0.30 per diluted share, excluding special items. Special items in 2004 totaled $0.7 million of pretax income, with $7.7 million of income received under the Continued Dumping and Subsidy Offset Act (CDSOA) virtually offset by integration expenses related to Torrington. In the first quarter of 2003, special items were $3.6 million of pretax expense.
"We have seen a broad-based improvement across our three business groups," said James W. Griffith, president and CEO. "Improving markets, coupled with actions taken in 2003 to strengthen the businesses, are hitting the bottom line."
Stronger demand in industrial markets benefited both the Industrial and Steel Groups. "We are in a good position to leverage this economic upturn," Mr. Griffith said. "Changes to surcharge mechanisms were effective in partially offsetting unprecedented increases in scrap steel prices and allowed the Steel Group to return to profitability. Automotive Group margins were better than last year, reflecting stronger volume and manufacturing improvements."
"We are reporting record sales, but are still well below record earning levels," said Mr. Griffith. "We are encouraged by the growing strength of the global economy, but still face an increasingly competitive environment, and we will continue to take aggressive action to improve performance."
For the quarter, the company achieved pretax integration savings of $17 million, driven by leveraging the combined purchasing of Torrington and Timken. The company is on track to achieve its target of $80 million of pretax integration savings during 2005.
Total debt at March 31, 2004 was $812.3 million, 42.3 percent of capital. Debt was higher than the 2003 year-end level of $734.6 million due to cash contributions to domestic pension plans and seasonal working capital. The company expects its leverage to be lower at the end of this year compared to last year.
Outlook
The company continues to expect improved performance in 2004 across all three segments. The company expects earnings per diluted share, excluding special items, to be $0.27 to $0.32 for the second quarter and $1.00 to $1.10 for the year.
North American light vehicle production is expected to be up slightly and medium/heavy truck production should continue to be very strong relative to last year. Automotive Group profitability is expected to continue to be better than 2003, as the benefits of cost reduction efforts impact performance. The company continues to see growing demand in global industrial markets, which should favorably impact results. Steel Group profitability is expected to be challenged by continued high raw material and energy costs, but improved volume coupled with surcharge mechanisms and price increases should allow the Group to remain profitable for the year.
(www.timken.com)
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