Date of Report (Date of earliest event reported): | |||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||||||||
| Exhibit No. | Description | |||||||
| 99.1 | Press Release of The Timken Company dated May 2, 2022 | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
| THE TIMKEN COMPANY | |||||
| By: | /s/ Philip D. Fracassa | ||||
| Philip D. Fracassa | |||||
| Executive Vice President and Chief Financial Officer | |||||
Date: May 2, 2022 | |||||
| Exhibit No. | Description | |||||||
| Press Release of The Timken Company dated May 2, 2022 | ||||||||
| Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||||||
| TIMKEN | ||
1 | ||
| TIMKEN | ||
2 | ||
| TIMKEN | ||
| Conference Call: | Monday, May 2, 2022 | ||||
10:00 a.m. Eastern Time | |||||
Live Dial-In: 800-458-4121 | |||||
Or 313-209-6672 | |||||
(Call in 10 minutes prior to be included.) | |||||
Conference ID: Timken’s Q1 Earnings Call | |||||
Or Click to Join: https://tmkn.biz/37HiYYV | |||||
| Conference Call Replay: | Replay Dial-In available through May 16, 2022: | ||||
888-203-1112 or 719-457-0820 | |||||
Replay Passcode: 2919020 | |||||
Live Webcast: | http://investors.timken.com | ||||
3 | ||
| TIMKEN | ||
4 | ||
| TIMKEN | ||
| The Timken Company | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (Dollars in millions, except share data) (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net sales | $ | 1,124.6 | $ | 1,025.4 | ||||
| Cost of products sold | 797.2 | 726.2 | ||||||
| Gross Profit | 327.4 | 299.2 | ||||||
| Selling, general & administrative expenses | 154.1 | 144.5 | ||||||
| Impairment and restructuring charges | 1.0 | 4.0 | ||||||
| Operating Income | 172.3 | 150.7 | ||||||
| Non-service pension and other postretirement income | 1.3 | 4.0 | ||||||
| Other income, net | 0.2 | 1.0 | ||||||
| Interest expense, net | (13.7) | (14.4) | ||||||
| Income Before Income Taxes | 160.1 | 141.3 | ||||||
| Provision for income taxes | 38.2 | 25.3 | ||||||
| Net Income | 121.9 | 116.0 | ||||||
| Less: Net income attributable to noncontrolling interest | 3.7 | 2.7 | ||||||
| Net Income Attributable to The Timken Company | $ | 118.2 | $ | 113.3 | ||||
| Net Income per Common Share Attributable to The Timken Company Common Shareholders | ||||||||
| Basic Earnings per share | $ | 1.58 | $ | 1.49 | ||||
| Diluted Earnings per share | $ | 1.56 | $ | 1.47 | ||||
| Average Shares Outstanding | 74,782,153 | 75,820,157 | ||||||
| Average Shares Outstanding - assuming dilution | 75,545,665 | 77,264,641 | ||||||
5 | ||
| TIMKEN | ||
| BUSINESS SEGMENTS | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| (Dollars in millions) | 2022 | 2021 | ||||||
| Mobile Industries | ||||||||
| Net sales | $ | 540.4 | $ | 504.5 | ||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) (1) | $ | 75.1 | $ | 79.6 | ||||
EBITDA Margin (1) | 13.9 | % | 15.8 | % | ||||
| Process Industries | ||||||||
| Net sales | $ | 584.2 | $ | 520.9 | ||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) (1) | $ | 155.6 | $ | 131.0 | ||||
EBITDA Margin (1) | 26.6 | % | 25.1 | % | ||||
| Unallocated corporate expense | $ | (12.9) | $ | (11.6) | ||||
Corporate pension and other postretirement benefit related expense (2) | (2.6) | (0.9) | ||||||
Acquisition-related gain (3) | — | 0.6 | ||||||
| Consolidated | ||||||||
| Net sales | $ | 1,124.6 | $ | 1,025.4 | ||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) (1) | $ | 215.2 | $ | 198.7 | ||||
EBITDA Margin (1) | 19.1 | % | 19.4 | % | ||||
(1) EBITDA is a non-GAAP measure defined as operating income plus other income (expense) and excluding depreciation and amortization. EBITDA Margin is a non-GAAP measure defined as EBITDA as a percentage of net sales. EBITDA and EBITDA Margin are important financial measures used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. Management believes that reporting EBITDA and EBITDA Margin is useful to investors as these measures are representative of the core operations of the segments and Company, respectively. | ||||||||
(2) Corporate pension and other postretirement benefit related expense primarily represents actuarial (losses) and gains that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial (losses) and gains in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to the Retirement Benefit Plans and Other Postretirement Benefit Plans footnotes within the Company's annual reports on Form 10-K and quarterly reports on Form 10-Q for additional discussion. | ||||||||
(3) The acquisition-related gain represents a bargain purchase price gain on the acquisition of the assets of Aurora Bearing Company ("Aurora") that closed on November 30, 2020. | ||||||||
6 | ||
| TIMKEN | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Dollars in millions) | (Unaudited) | ||||||||||
| March 31, 2022 | December 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 424.5 | $ | 257.1 | |||||||
| Restricted cash | 0.7 | 0.8 | |||||||||
| Accounts receivable, net | 743.9 | 626.4 | |||||||||
| Unbilled receivables | 88.5 | 104.5 | |||||||||
| Inventories, net | 1,112.6 | 1,042.7 | |||||||||
| Other current assets | 178.1 | 182.0 | |||||||||
| Total Current Assets | 2,548.3 | 2,213.5 | |||||||||
| Property, plant and equipment, net | 1,039.9 | 1,055.3 | |||||||||
| Operating lease assets | 116.7 | 118.9 | |||||||||
| Goodwill and other intangible assets | 1,659.0 | 1,691.5 | |||||||||
| Other assets | 94.6 | 91.5 | |||||||||
| Total Assets | $ | 5,458.5 | $ | 5,170.7 | |||||||
| LIABILITIES | |||||||||||
| Accounts payable | $ | 416.1 | $ | 430.0 | |||||||
| Short-term debt, including current portion of long-term debt | 41.0 | 53.8 | |||||||||
| Income taxes | 30.0 | 26.2 | |||||||||
| Accrued expenses | 379.1 | 386.6 | |||||||||
| Total Current Liabilities | 866.2 | 896.6 | |||||||||
| Long-term debt | 1,747.2 | 1,411.1 | |||||||||
| Accrued pension benefits | 156.5 | 155.6 | |||||||||
| Accrued postretirement benefits | 45.3 | 45.8 | |||||||||
| Long-term operating lease liabilities | 76.5 | 77.6 | |||||||||
| Other non-current liabilities | 211.8 | 206.3 | |||||||||
| Total Liabilities | 3,103.5 | 2,793.0 | |||||||||
| EQUITY | |||||||||||
| The Timken Company shareholders' equity | 2,271.1 | 2,294.9 | |||||||||
| Noncontrolling interest | 83.9 | 82.8 | |||||||||
| Total Equity | 2,355.0 | 2,377.7 | |||||||||
| Total Liabilities and Equity | $ | 5,458.5 | $ | 5,170.7 | |||||||
7 | ||
| TIMKEN | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| (Dollars in millions) | 2022 | 2021 | ||||||
| Cash Provided by (Used in) | ||||||||
| OPERATING ACTIVITIES | ||||||||
| Net Income | $ | 121.9 | $ | 116.0 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 41.4 | 43.0 | ||||||
| Stock-based compensation expense | 7.1 | 6.5 | ||||||
| Pension and other postretirement benefit expense (income) | 1.0 | (1.0) | ||||||
| Pension and other postretirement benefit contributions and payments | (5.2) | (2.5) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (118.2) | (138.9) | ||||||
| Unbilled receivables | 16.1 | (2.5) | ||||||
| Inventories | (70.2) | (33.3) | ||||||
| Accounts payable | 7.7 | 19.9 | ||||||
| Accrued expenses | (19.5) | 17.0 | ||||||
| Income taxes | 8.1 | 1.6 | ||||||
| Other, net | 8.6 | 5.9 | ||||||
| Net Cash (Used in) Provided by Operating Activities | $ | (1.2) | $ | 31.7 | ||||
| INVESTING ACTIVITIES | ||||||||
| Capital expenditures | $ | (34.3) | $ | (29.4) | ||||
| Investments in short-term marketable securities, net | (0.8) | (9.9) | ||||||
| Other, net | 0.1 | (0.1) | ||||||
| Net Cash Used in Investing Activities | $ | (35.0) | $ | (39.4) | ||||
| FINANCING ACTIVITIES | ||||||||
| Cash dividends paid to shareholders | $ | (23.5) | $ | (23.8) | ||||
| Purchase of treasury shares | (100.0) | (26.3) | ||||||
| Proceeds from exercise of stock options | 1.4 | 14.1 | ||||||
| Payments related to tax withholding for stock-based compensation | (7.5) | (17.8) | ||||||
| Net (payments) proceeds from credit facilities | (11.1) | 49.7 | ||||||
| Net proceeds (payments) on long-term debt | 341.6 | (2.3) | ||||||
| Other, net | 3.8 | — | ||||||
| Net Cash Provided by (Used in) Financing Activities | $ | 204.7 | $ | (6.4) | ||||
| Effect of exchange rate changes on cash | (1.2) | (3.9) | ||||||
| Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | $ | 167.3 | $ | (18.0) | ||||
| Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 257.9 | 321.1 | ||||||
| Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 425.2 | $ | 303.1 | ||||
8 | ||
| TIMKEN | ||
| Reconciliations of Adjusted Net Income to GAAP Net Income and Adjusted Earnings Per Share to GAAP Earnings Per Share: | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| The following reconciliation is provided as additional relevant information about the Company's performance deemed useful to investors. Management believes that the non-GAAP measures of adjusted net income and adjusted diluted earnings per share are important financial measures used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. Management believes that reporting adjusted net income and adjusted diluted earnings per share is useful to investors as these measures are representative of the Company's core operations. | ||||||||||||||||||||
| (Dollars in millions, except share data) | Three Months Ended March 31, | |||||||||||||||||||
| 2022 | EPS | 2021 | EPS | |||||||||||||||||
| Net Income Attributable to The Timken Company | $ | 118.2 | $ | 1.56 | $ | 113.3 | $ | 1.47 | ||||||||||||
Adjustments: (1) | ||||||||||||||||||||
Impairment, restructuring and reorganization charges (2) | $ | 1.6 | $ | 5.2 | ||||||||||||||||
Corporate pension and other postretirement benefit related expense (3) | 2.6 | 0.9 | ||||||||||||||||||
Acquisition-related charges (gain) (4) | 1.1 | (0.8) | ||||||||||||||||||
Russia-related charges (5) | 4.6 | — | ||||||||||||||||||
| Noncontrolling interest of above adjustments | (1.3) | 0.2 | ||||||||||||||||||
Provision for income taxes (6) | (5.1) | (12.1) | ||||||||||||||||||
| Total Adjustments: | 3.5 | 0.05 | (6.6) | (0.09) | ||||||||||||||||
| Adjusted Net Income Attributable to The Timken Company | $ | 121.7 | $ | 1.61 | $ | 106.7 | $ | 1.38 | ||||||||||||
(1) Adjustments are pre-tax, with the net tax provision listed separately. | ||||||||||||||||||||
(2) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; (iii) severance related to cost reduction initiatives and (iv) related depreciation and amortization. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations. | ||||||||||||||||||||
(3) Corporate pension and other postretirement benefit related expense represents actuarial losses and (gains) that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial losses and (gains) in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to the Retirement Benefit Plans and Other Postretirement Benefit Plans footnotes within the Company's annual reports on Form 10-K and quarterly reports on Form 10-Q for additional discussion. | ||||||||||||||||||||
(4) Acquisition-related charges (gain) represent the contingent consideration related to the acquisition of Intelligent Machine Solutions ("iMS") that closed on August 20, 2021, and deal-related expenses associated with completed and certain unsuccessful transactions, as well as any resulting inventory step-up impact. In addition, the 2021 acquisition-related gain includes measurement period adjustments to the bargain purchase gain on the acquisition of the assets of Aurora that closed on November 30, 2020. | ||||||||||||||||||||
(5) Russia-related charges include allowances or impairments recorded against certain trade receivables, inventory and other assets to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations. Refer to Russia Operations in Management Discussion and Analysis within the Company's quarterly report on Form 10-Q for additional information. | ||||||||||||||||||||
(6) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of discrete tax items recorded during the respective periods as well as other adjustments to reflect the use of one overall effective tax rate on adjusted pre-tax income in interim periods. | ||||||||||||||||||||
9 | ||
| TIMKEN | ||
| Reconciliation of EBITDA to GAAP Net Income, EBITDA Margin to Net Income as a Percentage of Sales, and EBITDA Margin, After Adjustments, to Net Income as a Percentage of Sales, and EBITDA, After Adjustments, to Net Income: | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| The following reconciliation is provided as additional relevant information about the Company's performance deemed useful to investors. Management believes consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP measure that is useful to investors as it is representative of the Company's performance and that it is appropriate to compare GAAP net income to consolidated EBITDA. Management also believes that adjusted EBITDA, adjusted EBITDA margin and EBITDA margin are useful to investors as they are representative of the Company's core operations and are used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. | |||||||||||||||||
| (Dollars in millions) | Three Months Ended March 31, | ||||||||||||||||
| 2022 | Percentage to Net Sales | 2021 | Percentage to Net Sales | ||||||||||||||
| Net Income | $ | 121.9 | 10.8 | % | $ | 116.0 | 11.3 | % | |||||||||
| Provision for income taxes | 38.2 | 25.3 | |||||||||||||||
| Interest expense | 14.3 | 14.9 | |||||||||||||||
| Interest income | (0.6) | (0.5) | |||||||||||||||
| Depreciation and amortization | 41.4 | 43.0 | |||||||||||||||
| Consolidated EBITDA | $ | 215.2 | 19.1 | % | $ | 198.7 | 19.4 | % | |||||||||
| Adjustments: | |||||||||||||||||
Impairment, restructuring and reorganization charges (1) | $ | 1.6 | $ | 4.9 | |||||||||||||
Corporate pension and other postretirement benefit related expense (2) | 2.6 | 0.9 | |||||||||||||||
Acquisition-related charges (gain) (3) | 1.1 | (0.8) | |||||||||||||||
Russia-related charges (4) | 4.6 | — | |||||||||||||||
Total Adjustments | 9.9 | 0.9 | % | 5.0 | 0.5 | % | |||||||||||
| Adjusted EBITDA | $ | 225.1 | 20.0 | % | $ | 203.7 | 19.9 | % | |||||||||
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; and (iii) severance related to cost reduction initiatives. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations. | |||||||||||||||||
(2) Corporate pension and other postretirement benefit related expense represents actuarial losses and (gains) that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial losses and (gains) in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. Refer to the Retirement Benefit Plans and Other Postretirement Benefit Plans footnotes within the Company's annual reports on Form 10-K and quarterly reports on Form 10-Q for additional discussion. | |||||||||||||||||
(3) Acquisition-related charges (gain) represent the contingent consideration related to the acquisition of iMS that closed on August 20, 2021, and deal-related expenses associated with completed and certain unsuccessful transactions, as well as any resulting inventory step-up impact. In addition, the 2021 acquisition-related gain includes measurement period adjustments to the bargain purchase gain on the acquisition of the assets of Aurora that closed on November 30, 2020. | |||||||||||||||||
(4) Russia-related charges include allowances or impairments recorded against certain trade receivables, inventory and other assets to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations. Refer to Russia Operations in Management Discussion and Analysis within the Company's quarterly report on Form 10-Q for additional information. | |||||||||||||||||
10 | ||
| TIMKEN | ||
| Reconciliation of segment EBITDA Margin, After Adjustments, to segment EBITDA as a Percentage of Sales and segment EBITDA, After Adjustments, to segment EBITDA: | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| The following reconciliation is provided as additional relevant information about the Company's Mobile Industries and Process Industries segment performance deemed useful to investors. Management believes that non-GAAP measures of adjusted EBITDA and adjusted EBITDA margin for the segments are useful to investors as they are representative of each segment's core operations and are used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. | |||||||||||||||||
| Mobile Industries | |||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||
| (Dollars in millions) | 2022 | Percentage to Net Sales | 2021 | Percentage to Net Sales | |||||||||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ | 75.1 | 13.9 | % | $ | 79.6 | 15.8 | % | |||||||||
Impairment, restructuring and reorganization charges (1) | 1.0 | 0.3 | |||||||||||||||
Acquisition-related charges (2) | — | 0.2 | |||||||||||||||
Russia-related charges (3) | 3.1 | — | |||||||||||||||
| Adjusted EBITDA | $ | 79.2 | 14.7 | % | $ | 80.1 | 15.9 | % | |||||||||
| Process Industries | |||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||
| (Dollars in millions) | 2022 | Percentage to Net Sales | 2021 | Percentage to Net Sales | |||||||||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ | 155.6 | 26.6 | % | $ | 131.0 | 25.1 | % | |||||||||
Impairment, restructuring and reorganization charges (1) | 0.6 | 4.6 | |||||||||||||||
Acquisition-related charges (2) | 0.4 | 0.1 | |||||||||||||||
Russia-related charges (3) | 1.5 | — | |||||||||||||||
| Adjusted EBITDA | $ | 158.1 | 27.1 | % | $ | 135.7 | 26.0 | % | |||||||||
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants; and (iii) severance related to cost reduction initiatives. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations. | |||||||||||||||||
(2) The acquisition-related charges represent contingent consideration related to the acquisition of iMS that closed on August 20, 2021 and the inventory step-up impact of the acquisitions. | |||||||||||||||||
(3) Russia-related charges include allowances or impairments recorded against certain trade receivables, inventory and other assets to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations. Refer to Russia Operations in Management Discussion and Analysis within the Company's quarterly report on Form 10-Q for additional information. | |||||||||||||||||
11 | ||
| TIMKEN | ||
| Reconciliation of Total Debt to Net Debt, the Ratio of Net Debt to Capital, and the Ratio of Net Debt to Adjusted EBITDA: | ||||||||
| (Unaudited) | ||||||||
| These reconciliations are provided as additional relevant information about the Company's financial position deemed useful to investors. Capital, used for the ratio of net debt to capital, is a non-GAAP measure defined as total debt less cash and cash equivalents plus total shareholders' equity. Management believes Net Debt, the Ratio of Net Debt to Capital, Adjusted EBITDA (see above), and the Ratio of Net Debt to Adjusted EBITDA are important measures of the Company's financial position, due to the amount of cash and cash equivalents on hand. The Company presents net debt to adjusted EBITDA because it believes it is more representative of the Company's financial position as it is reflective of the ability to cover its net debt obligations with results from its core operations. | ||||||||
| (Dollars in millions) | ||||||||
| March 31, 2022 | December 31, 2021 | |||||||
| Short-term debt, including current portion of long-term debt | $ | 41.0 | $ | 53.8 | ||||
| Long-term debt | 1,747.2 | 1,411.1 | ||||||
| Total Debt | $ | 1,788.2 | $ | 1,464.9 | ||||
| Less: Cash and cash equivalents | (424.5) | (257.1) | ||||||
| Net Debt | $ | 1,363.7 | $ | 1,207.8 | ||||
| Total Equity | $ | 2,355.0 | $ | 2,377.7 | ||||
| Ratio of Net Debt to Capital | 36.7 | % | 33.7 | % | ||||
| Adjusted EBITDA for the Twelve Months Ended | $ | 739.4 | $ | 718.0 | ||||
| Ratio of Net Debt to Adjusted EBITDA | 1.8 | 1.7 | ||||||
| Reconciliation of Free Cash Flow to GAAP Net Cash Provided by Operating Activities: | ||||||||
| (Unaudited) | ||||||||
| Management believes that free cash flow is a non-GAAP measure that is useful to investors because it is a meaningful indicator of cash generated from operating activities available for the execution of its business strategy. | ||||||||
| (Dollars in millions) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net cash (used in) provided by operating activities | $ | (1.2) | $ | 31.7 | ||||
| Less: capital expenditures | (34.3) | (29.4) | ||||||
| Free cash flow | $ | (35.5) | $ | 2.3 | ||||
12 | ||
| TIMKEN | ||
| Reconciliation of EBITDA, After Adjustments, to GAAP Net Income: | ||||||||
| (Unaudited) | ||||||||
| The following reconciliation is provided as additional relevant information about the Company's performance deemed useful to investors. Management believes consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP measure that is useful to investors as it is representative of the Company's performance and that it is appropriate to compare GAAP net income to consolidated EBITDA. Management also believes that the non-GAAP measure of adjusted EBITDA is useful to investors as it is representative of the Company's core operations and is used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. | ||||||||
| (Dollars in millions) | Twelve Months Ended March 31, 2022 | Twelve Months Ended December 31, 2021 | ||||||
| Net Income | $ | 387.4 | $ | 381.5 | ||||
| Provision for income taxes | 108.0 | 95.1 | ||||||
| Interest expense | 58.2 | 58.8 | ||||||
| Interest income | (2.4) | (2.3) | ||||||
| Depreciation and amortization | 166.2 | 167.8 | ||||||
| Consolidated EBITDA | $ | 717.4 | $ | 700.9 | ||||
| Adjustments: | ||||||||
Impairment, restructuring and reorganization charges (1) | $ | 11.0 | $ | 14.3 | ||||
Corporate pension and other postretirement benefit related expense (2) | 2.0 | 0.3 | ||||||
Acquisition-related charges (3) | 4.2 | 2.3 | ||||||
Russia-related charges (4) | 4.6 | — | ||||||
| Tax indemnification and related items | 0.2 | 0.2 | ||||||
Total Adjustments | 22.0 | 17.1 | ||||||
| Adjusted EBITDA | $ | 739.4 | $ | 718.0 | ||||
(1) Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants and (iii) severance related to cost reduction initiatives. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations. | ||||||||
(2) Corporate pension and other postretirement benefit related expense represents actuarial losses and (gains) that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions or experience. The Company recognizes actuarial losses and (gains) in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement. | ||||||||
(3) Acquisition-related charges represent contingent consideration related to the acquisition of iMS that closed on August 20, 2021, and deal-related expenses associated with completed and certain unsuccessful transactions, as well as any resulting inventory step-up impact. Also included is the acquisition-related gain related to measurement period adjustments to the bargain purchase gain on the acquisition of the assets of Aurora that closed on November 30, 2020. | ||||||||
(4) Russia-related charges include allowances or impairments recorded against certain trade receivables, inventory and other assets to reflect the current impact of Russia's invasion of Ukraine (and associated sanctions) on the Company's operations. Refer to Russia Operations in Management Discussion and Analysis within the Company's quarterly report on Form 10-Q for additional information. | ||||||||
13 | ||
| TIMKEN | ||
| Reconciliation of Adjusted Earnings per Share to GAAP Earnings per Share for Full Year 2022 Outlook: | |||||||||||
| (Unaudited) | |||||||||||
| The following reconciliation is provided as additional relevant information about the Company's outlook deemed useful to investors. Forecasted full year adjusted diluted earnings per share is an important financial measure that management believes is useful to investors as it is representative of the Company's expectation for the performance of its core business operations. | |||||||||||
| Low End Earnings Per Share | High End Earnings Per Share | ||||||||||
| Forecasted full year GAAP diluted earnings per share | $ | 4.85 | $ | 5.25 | |||||||
| Forecasted Adjustments: | |||||||||||
Restructuring and other special items, net (1) | 0.15 | 0.15 | |||||||||
Total Adjustments: | $ | 0.15 | $ | 0.15 | |||||||
| Forecasted full year adjusted diluted earnings per share | $ | 5.00 | $ | 5.40 | |||||||
(1) Restructuring and other special items, net do not include the impact of any potential mark-to-market pension and other postretirement remeasurement adjustments, because the amounts will not be known until incurred. | |||||||||||
14 | ||
Cover Document |
May 02, 2022 |
|---|---|
| Document Information [Line Items] | |
| Document Type | 8-K |
| Entity Registrant Name | TIMKEN CO |
| Entity Central Index Key | 0000098362 |
| Amendment Flag | false |
| Entity File Number | 1-1169 |
| Entity Incorporation, State or Country Code | OH |
| Entity Tax Identification Number | 34-0577130 |
| Entity Address, Address Line One | 4500 Mount Pleasant Street NW |
| Entity Address, City or Town | North Canton |
| Entity Address, State or Province | OH |
| Entity Address, Postal Zip Code | 44720-5450 |
| City Area Code | 234 |
| Local Phone Number | 262.3000 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Shares, without par value |
| Trading Symbol | TKR |
| Security Exchange Name | NYSE |
| Entity Emerging Growth Company | false |
| Document Period End Date | May 02, 2022 |
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