Timken Reports Second-Quarter 2024 Results
- Sales of $1.18 billion, in line with company expectations
- Second-quarter earnings per share of $1.36; adjusted EPS of $1.63
- Net income margin of 8.1 percent; adjusted EBITDA margin of 19.5 percent
- Updates full-year 2024 outlook; now expects EPS of $5.00-$5.20, with adjusted EPS of $6.00-$6.20
NORTH CANTON, Ohio, July 31, 2024 /PRNewswire/ -- The Timken Company (NYSE: TKR; www.timken.com), a global technology leader in engineered bearings and industrial motion, today reported second-quarter 2024 sales of $1.18 billion, down 7.1 percent from last year's record level. Organically, sales were down 7.7 percent, with most of the decline attributable to significantly lower renewable energy demand in China. Sales were relatively flat compared to the first quarter on an organic basis and in line with company expectations.
Timken posted net income in the second quarter of $96.2 million or $1.36 per diluted share. This compares to net income of $125.2 million or $1.73 per diluted share for the same period a year ago. The company's net income margin in the quarter was 8.1 percent, compared to 9.8 percent in the second quarter of last year.
Excluding special items (detailed in the attached tables), adjusted net income in the second quarter was $115.2 million or $1.63 per diluted share. This compares to adjusted net income of $146.1 million or $2.01 per diluted share for the same period in 2023. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the quarter was $230.2 million or 19.5 percent of sales, compared with $263.0 million or 20.7 percent of sales in the second quarter of last year.
Net cash from operations for the quarter was $124.6 million, and free cash flow was $87.3 million. During the quarter, Timken increased its quarterly dividend by 3 percent and repurchased 360 thousand shares of company stock. In total, the company returned $53.6 million of cash to shareholders through dividends and share repurchases during the quarter.
In May, the company completed the sale of a portion of its stake in Timken India Limited (TIL), generating pre-tax proceeds of approximately $232 million. Timken continues to hold a majority stake in TIL and plans no further sale transactions. As of the end of the second quarter, the company's net debt-to-adjusted EBITDA ratio was 1.9 times, with no significant debt maturities until 2027.
"The Timken team continues to execute well in this dynamic environment, achieving solid second-quarter results that were in line with our expectations," said Richard G. Kyle, president and chief executive officer. "We delivered strong margins in both segments, including excellent performance from our recent acquisitions. And we continued to advance our strategic initiatives during the quarter to strengthen the company for the future."
Second-Quarter 2024 Segment Results
Engineered Bearings sales of $783.4 million decreased 8.6 percent from the same period a year ago. The decrease was driven by lower end-market demand and unfavorable foreign currency translation. Renewable energy saw the most significant organic decline in the quarter, driven almost entirely by continued weakness in China. Among other market sectors, industrial distribution, aerospace and rail shipments were higher compared to the same period a year ago, while off-highway revenue was lower.
EBITDA for the quarter was $163.3 million or 20.8 percent of sales, compared with EBITDA of $185.5 million or 21.6 percent of sales for the same period a year ago. The decrease in EBITDA was driven primarily by the impact of lower volume, partially offset by favorable price/mix and improved manufacturing performance.
Excluding special items, adjusted EBITDA in the quarter was $166.2 million or 21.2 percent of sales, compared with $189.6 million or 22.1 percent of sales in the second quarter of last year.
Industrial Motion sales of $398.9 million decreased 3.9 percent compared with the same period a year ago. The decrease was driven primarily by lower end-market demand, partially offset by the benefit of acquisitions and higher pricing. Organically, most platforms were lower as compared to the prior year, with drive systems and linear motion posting the largest declines.
EBITDA for the quarter was $75.6 million or 19.0 percent of sales, compared with EBITDA of $80.9 million or 19.5 percent of sales for the same period a year ago. The decrease in EBITDA was driven primarily by the impact of lower volume, partially offset by the benefit of acquisitions and favorable selling, general and administrative (SG&A) expenses.
Excluding special items, adjusted EBITDA in the quarter was $79.7 million or 20.0 percent of sales, compared with $85.9 million or 20.7 percent of sales in the second quarter of last year.
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