Timken Reports Third-Quarter 2021 Results

- Sales of $1.04 billion, up 16 percent from last year

- Earnings per diluted share of $1.14 on a GAAP basis; adjusted earnings per diluted share of $1.18

- Backlog and orders remain strong; Company expects robust demand environment and significant price realization in 2022

The Timken Company (NYSE: TKR; www.timken.com), a global industrial leader in engineered bearings and power transmission products, today reported third-quarter 2021 sales of $1.04 billion, up 16 percent from the same period a year ago, and 13 percent higher than the previous record third quarter. The increase was driven by organic growth across most end-market sectors led by industrial distribution and off-highway, higher pricing and the benefit of currency translation and acquisitions.

Timken posted net income of $88.1 million or $1.14 per diluted share in the third quarter, versus net income of $88.8 million or $1.16 per diluted share for the same period a year ago. The slight year-over-year decline was primarily driven by higher operating costs and the net unfavorable impact of pension remeasurement and restructuring charges, which were mostly offset by the impact of higher volume and related manufacturing utilization, positive price/mix, a lower tax rate and favorable currency.

Excluding special items (detailed in the attached tables), adjusted net income in the third quarter was $91.0 million or $1.18 per diluted share, a record for the third quarter, versus adjusted net income of $86.4 million or $1.13 per diluted share for the same period in 2020.

Net cash from operations for the third quarter was $105.8 million, and free cash flow was $62.7 million. During the quarter, Timken returned $53.1 million of cash to shareholders with the payment of its 397th consecutive quarterly dividend and the repurchase of 400 thousand shares of company stock. Timken also completed the acquisition of Intelligent Machine Solutions (iMS), which expands the company's growing linear motion portfolio. Timken ended the third quarter with a strong balance sheet; financial leverage as measured by net debt to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was 1.6 times as of September 30, 2021.

"In the third quarter, Timken responded to the strong market demand and achieved double-digit revenue growth compared to the prior year despite the challenging operating environment," said Richard G. Kyle, Timken president and chief executive officer. "While our performance was impacted by supply chain disruptions, inflation and higher costs to serve customers, we stayed focused on winning new business and advancing our strategic initiatives." 

Third-Quarter 2021 Segment Results

Process Industries sales of $550.0 million increased 18 percent from the same period a year ago. The increase was driven by organic growth across most sectors led by distribution and general industrial, higher pricing and the favorable impact of currency translation.

EBITDA for the quarter was $129.7 million or 23.6 percent of sales, compared with EBITDA of $109.2 million or 23.4 percent of sales for the same period a year ago. The increase in EBITDA was driven primarily by the positive impact of higher volume and related manufacturing utilization, positive price/mix, favorable currency and lower restructuring charges, partially offset by higher operating costs.

Excluding special items (detailed in the attached tables), adjusted EBITDA in the quarter was $130.7 million or 23.8 percent of sales, compared with $115.2 million or 24.7 percent of sales in the third quarter last year.

Mobile Industries sales of $487.3 million increased 13.7 percent compared with the same period a year ago. The increase was driven by higher shipments in the off-highway and heavy truck sectors, higher pricing and the favorable impact of currency translation, partially offset by lower revenue in the automotive sector.

EBITDA for the quarter was $53.2 million or 10.9 percent of sales, compared with EBITDA of $64.0 million or 14.9 percent of sales for the same period a year ago. The decrease in EBITDA reflects the impact of higher operating costs, partially offset by the favorable impact of higher volume and related manufacturing utilization, and positive price/mix.

Excluding special items (detailed in the attached tables), adjusted EBITDA in the quarter was $58.2 million or 11.9 percent of sales, compared with $68.4 million or 16.0 percent of sales in the third quarter last year.

Outlook Commentary

"We expect operating conditions through the rest of the year to be similar to the third quarter, with the benefits of strong demand being largely offset by inflation and higher costs to serve customers," said Kyle. "As we look out to 2022, we are planning for the robust demand environment to continue, with supply chain issues persisting through at least the early part of the year. We expect to offset these headwinds with significant price realization and operational excellence initiatives, and we are well positioned to deliver higher levels of performance in 2022."

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.

Conference Call:

Monday, November 1, 2021

11:00 a.m. Eastern Time

Live Dial-In: 800-458-4121

Or +1 313-209-6672

(Call in 10 minutes prior to be included.)

Conference ID: Timken's 3Q Earnings Call

Or Click to Join: https://tmkn.biz/3oH1n9V

Conference Call Replay: 

Replay Dial-In available through

November 15, 2021:

888-203-1112 or 719-457-0820

Replay Passcode: 9232877

Live Webcast:  

http://investors.timken.com