Timken earnings drop but beat analyst estimates; steel spinoff on track
Resource from: Akron Beacon Journal Likes:111
Feb 08,2014
Canton bearings and steel maker Timken Co. released fourth-quarter and full-year 2013 financial results Thursday, saying it expects to earn $3.15 to $3.45 per share in 2014.
Sales and net income were down for the fourth quarter compared to a year ago, and full-year results were down from fiscal 2012, as well.
Full-year 2014 earnings are expected to account for the proposed spinoff of the company’s steel business as of July 1; cost-reduction initiatives; and a 30 cents per share gain by selling land in Brazil.
Timken said it had net income of $52.6 million, or 55 cents per share, on sales of $1.1 billion for the fourth quarter. Net income dropped 30.1 percent from $75.3 million, or 78 cents per share, a year ago. Revenue was down 2 percent from the fourth quarter of 2012.
Excluding one-time items, Timken said it had fourth-quarter net income of $73.5 million or 78 cents per share, down from a comparable $77.9 million, or 80 cents per share a year ago.
Sales fell largely because of lower demand in North America from industrial, mining, heavy-truck and light-vehicle market sectors, the company said.
Timken’s fourth-quarter results beat analyst expectations. Shares rose $3.09, or 5.7 percent, to $57.62. Shares are up 4.6 percent, including dividends, since Jan. 1 and are up 9.5 percent from a year ago.
For the full year, Timken reported earning $262.7 million, or $2.74 a share, on sales of $4.3 billion for 2013. Net income was down 47 percent from $495.5 million or $5.07 a share in 2012.
“We ended the year consistent with our prior estimate, posting 2013 sales of $4.3 billion with earnings per diluted share of $2.74,” Jim Griffith, president and chief executive officer, said in an opening statement in a conference call with industry analysts. “We performed well while operating our plants at low levels of capacity. … In addition, we ended 2013 with our pension plans fully funded.”
Excluding one-time items, Timken said it had full-year net income of $295.5 million, or $3.09 per share. Net income was down 36.4 percent from a comparable $464.6 million, or $4.76 per share, a year ago.
Sales were down 13 percent from fiscal 2012, largely reflecting lower demand across most of the company’s broad end markets, Timken said.
For 2014, Timken said it expects to generate cash from operations of approximately $560 million, with free cash flow projected to be $165 million. Timken said it expects to pay about $85 million this year in dividends.
“Bottom line, the company is well positioned going into 2014 and we expect a good year,” Griffith said.
The spun-off, publicly traded steel company will be named TimkenSteel Corp. and trade on the New York Stock Exchange using the ticker TMST, Griffith said. The company likely will be spun off by July 1.
Timken expects to file documents in the next few weeks with the Securities and Exchange Commission mapping the details of the new steel company, Griffith said.
“We are targeting a mid-year separation and remain on track to achieve that goal,” Griffith said. “We expect the separation will cost approximately $110 million, the vast majority of which will be spent by the time of separation.”
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com
(Akron Beacon Journal)
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