- Posted sales of $1 billion, up over 10 percent from last year

- Delivered strong earnings per diluted share of $1.20 on a GAAP basis, with record second-quarter adjusted earnings per diluted share of $1.27

- Generated strong cash from operations of $158 million and free cash flow of $135 million

- Updates earnings outlook; now expects 2019 GAAP earnings per diluted share of $4.55 to $4.75 and adjusted earnings per diluted share of $4.80 to $5.00

 The Timken Company (NYSE: TKR; www.timken.com), a world leader in engineered bearings and power transmission products, today reported second-quarter 2019 sales of $1 billion, up 10.3 percent from the same period a year ago. The increase was primarily driven by the benefit of acquisitions and organic growth in the Process Industries segment, partially offset by unfavorable foreign currency translation.

In the second quarter, Timken posted net income of $92.5 million or $1.20 per diluted share, versus net income of $91 million or $1.16 per diluted share for the same period a year ago. The year-over-year increase was primarily driven by favorable price/mix and the benefit of acquisitions, offset partially by higher interest expense. The current period also included higher expenses related to restructuring, acquisitions and a legal accrual, while the prior period included a pension remeasurement gain.

Excluding special items (detailed in the attached tables), adjusted net income in the second quarter of 2019 was $97.9 million or $1.27 per diluted share, a record for the second quarter, versus adjusted net income of $87.2 million or $1.11 per diluted share for the same period in 2018.

Cash from operations for the quarter was $157.6 million, and free cash flow was $134.6 million. During the quarter, the company returned $36.6 million of capital to shareholders with the payment of its 388th consecutive quarterly dividend and the repurchase of approximately 320 thousand shares. 

"We posted strong performance in the second quarter with double-digit revenue growth, higher earnings and operating margins and excellent cash generation compared to a year ago," said Richard G. Kyle, Timken president and chief executive officer. "Our recent acquisitions are performing well and contributing to our strong results. We continue to win in the market place with our differentiated products, engineering innovation and industry-leading customer service. And we remain focused on executing our strategy and profitably growing our enterprise."

Second-Quarter 2019 Segment Results

Mobile Industries sales of $493.7 million increased 0.9 percent compared with the same period a year ago. The increase was driven primarily by the benefit of acquisitions net of divestitures, organic growth in the aerospace sector and higher shipments in automotive, mostly offset by lower shipments in off-highway and heavy truck, and unfavorable currency.

Earnings before interest and taxes (EBIT) in the quarter were $59.1 million or 12 percent of sales, compared with EBIT of $54.5 million or 11.1 percent of sales for the same period a year ago. The increase in EBIT reflects the benefit of acquisitions net of divestitures and lower logistics costs, partially offset by lower volume.

Excluding special items (detailed in the attached tables), adjusted EBIT in the quarter was $59.7 million or 12.1 percent of sales, compared with $54.9 million or 11.2 percent of sales in the second quarter last year.

Process Industries reported sales of $506.3 million, up 21.4 percent from the same period a year ago. The increase was driven primarily by the benefit of acquisitions and organic growth in the wind energy, heavy industries and marine sectors, partially offset by unfavorable currency.

EBIT for the quarter was $103 million or 20.3 percent of sales, compared with EBIT of $90.6 million or 21.7 percent of sales for the same period a year ago. The increase in EBIT was driven by higher volume, favorable price/mix and the benefit of acquisitions, partially offset by higher tariff costs and selling, general and administrative expenses. The current period also included acquisition-related charges.

Excluding special items (detailed in the attached tables), adjusted EBIT in the quarter was $107 million or 21.1 percent of sales, compared with $90.8 million or 21.8 percent of sales in the second quarter last year.

2019 Outlook

The company now expects 2019 revenue to be up approximately 7 to 9 percent in total versus 2018. This includes expected organic growth of 1? to 3? percent plus the benefit of acquisitions, partially offset by unfavorable foreign currency translation.

"While our organic growth rates have eased, the demand environment overall for Timken products and services supports our outlook for continued growth in the second half," said Kyle. "Softness in some markets like off-highway is being offset by our outgrowth efforts and strength in other markets like wind, solar and aerospace. We are lowering our full-year outlook for both revenue and earnings to reflect a more cautious view. However, for the year, we expect to deliver solid revenue growth, record earnings per share and strong cash flow. We are confident in our ability to profitably grow the company, as we continue to demonstrate with our 2019 results."

Timken now anticipates strong 2019 earnings per diluted share in the range of $4.55 to $4.75 for the full year on a GAAP basis. Excluding special items (detailed in the attached tables), the company expects record 2019 adjusted earnings per diluted share ranging from $4.80 to $5.00.

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: 

Wednesday, July 31, 2019

11:00 a.m. Eastern Time

Live Dial-In: 800-239-9838

or 323-794-2551

(Call in 10 minutes prior to be included.)

Conference ID: Timken's 2Q Earnings Call

Conference Call Replay:  

Replay Dial-In available through

August 14, 2019:

888-203-1112 or 719-457-0820

Replay Passcode: 7993365

Live Webcast: 

http://investors.timken.com

About The Timken Company

The Timken Company (NYSE: TKR; www.timken.com) designs a growing portfolio of engineered bearings and power transmission products. With more than a century of knowledge and innovation, we continuously improve the reliability and efficiency of global machinery and equipment to move the world forward. Timken posted $3.6 billion in sales in 2018 and employs more than 18,000 people globally, operating from 35 countries.

Certain statements in this release (including statements regarding the company's forecasts, estimates, plans and expectations) that are not historical in nature are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, the statements related to expectations regarding the company's future financial performance, including information under the heading 2019 "Outlook," are forward-looking.

The company cautions that actual results may differ materially from those projected or implied in forward-looking statements due to a variety of important factors, including: the finalization of the company's financial statements for the second quarter of 2019; the company's ability to respond to the changes in its end markets that could affect demand for the company's products; unanticipated changes in business relationships with customers or their purchases from the company; changes in the financial health of the company's customers, which may have an impact on the company's revenues, earnings and impairment charges; fluctuations in material and energy costs; the impact of changes to the company's accounting methods; recent world events that have increased the risks posed by international trade disputes, tariffs and sanctions; weakness in global or regional economic conditions and capital markets; the company's ability to satisfy its obligations under its debt agreements and renew or refinance borrowings on favorable terms; fluctuations in currency valuations; changes in the expected costs associated with product warranty claims; the ability to achieve satisfactory operating results in the integration of acquired companies, including realizing any accretion within expected timeframes or at all; the impact on operations of general economic conditions; fluctuations in customer demand; the impact on the company's pension obligations and assets due to changes in interest rates, investment performance and other tactics designed to reduce risk; and the company's ability to complete and achieve the benefits of announced plans, programs, initiatives, acquisitions and capital investments.

 Additional factors are discussed in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended Dec. 31, 2018, quarterly reports on Form 10-Q and current reports on Form 8-K. Except as required by the federal securities laws, the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.