Core Points - Tarak B. Mehta has departed as CEO and director of The Timken Company effective immediately due to personal reasons [1] - Richard G. Kyle has been appointed as interim president and CEO, having previously served in this role from 2014 to 2024 [2][4] - The Timken Board of Directors has initiated a comprehensive search for a new CEO, engaging Crist Kolder Associates to assist in identifying suitable candidates [3] Company Performance and Strategy - The Timken Company reported $4.6 billion in sales for 2024 and employs approximately 19,000 people across 45 countries [5] - Under Richard G. Kyle's previous leadership, Timken transformed into a global diversified industrial leader, achieving record financial performance and focusing on profitable growth [4] - The company emphasizes its strong leadership team and resilient business model, expressing confidence in its future and ability to drive profitable growth [3]

Core Insights - The Timken Company has been recognized as a 2025 World's Most Ethical Companies honoree by Ethisphere, highlighting its commitment to ethical business practices and governance [1][2] - Timken is one of only 10 companies to appear on the annual list 14 or more times, showcasing its long-standing dedication to ethical standards [2] - The recognition reflects Timken's focus on transparency, integrity, and a strong culture of ethics, which are valued by employees and stakeholders [2][4] Company Overview - Timken is a global technology leader in engineered bearings and industrial motion, with $4.6 billion in sales reported for 2024 [4] - The company employs approximately 19,000 people and operates in 45 countries, emphasizing its extensive global presence [4] - Timken has been innovating and creating customer-centric solutions for over 125 years, focusing on reliability and efficiency [4] Recognition Process - Ethisphere's assessment involves a proprietary questionnaire requiring companies to provide over 240 proof points related to ethics, compliance, governance, and social impact [3] - The annual list includes 136 companies from 19 countries and 44 industries, indicating a competitive and rigorous selection process [2][3]

Company Overview - The Timken Company is a global technology leader in engineered bearings and industrial motion, with a focus on designing next-generation products for diverse industries [2] - The company has over 125 years of experience in innovation and creating customer-centric solutions that enhance reliability and efficiency [2] - In 2024, Timken reported sales of $4.6 billion and employs approximately 19,000 people across 45 countries [2] Upcoming Events - Timken will participate in the BofA Global Research Global Industrials Conference in London on March 18, 2025 [1] - Key representatives from Timken at the conference will include Philip D. Fracassa, executive vice president and chief financial officer, and Andreas Roellgen, executive vice president and president of Engineered Bearings [1] - Materials shared during the conference will be accessible online for investors [1]

Core Points - The Timken Company is providing scholarships to 20 students pursuing various careers, demonstrating its commitment to education and community support [1][2] - Since the inception of the Timken Global Scholars Program in 1958, the company has awarded over $27 million in scholarships to 855 students [1] - The company reported $4.6 billion in sales for 2024 and employs approximately 19,000 people globally, operating in 45 countries [6] Scholarship Details - The Henry Timken Scholar Award, valued at $25,000 annually and renewable for up to three years, was awarded to Andrew Ziarko, who plans to study biomedical engineering and pre-dentistry [2] - The Jack Timken Scholar Award, valued at $20,000 annually and renewable for up to three years, was awarded to McGregor Brough, who intends to study business [3] - Six students received $10,000 annual awards, renewable for up to three years, while 12 students earned one-time scholarships of $10,000 each [3][4] Student Profiles - Notable scholarship recipients include: - Hannah Harley, majoring in biology at Michigan State University [4] - Frederick Li, studying biomedical engineering at Washington University in St. Louis [4] - Carter Russell, aspiring to study computer science and biomedical engineering at MIT [4] - Vedant Saraswat, planning to study organic chemistry at the National University of Singapore [4] - Aakar Sinha, majoring in computer science at Stanford University [4] - Navneet Vamanamoorthy, attending All India Institute of Medical Sciences for medical sciences [4] - Kendria Bynum, pursuing accounting at the University of North Carolina [4] - Layla De Vries, currently studying medicine in Germany [4] - Kristina Hess, studying speech pathology and audiology at Kent State University [4] - Sylvia Hough, majoring in astrophysics at The Ohio State University [4] - Martina Klecka, pursuing kinesiology at Azusa Pacific University [4] - Brynn Otto, studying biological sciences at Clemson University [5]

Financial Performance - Timken reported net sales of $4.573 billion in 2024, a decrease of 4.1% compared to $4.769 billion in 2023[129]. - Net income attributable to The Timken Company was $352.7 million in 2024, down 10.5% from $394.1 million in 2023[129]. - Adjusted net income for 2024 was $409.4 million, down from $508.1 million in 2023, with adjusted EBITDA of $844.8 million, compared to $939.7 million in 2023[206]. - The adjusted EBITDA margin for 2024 was 18.5%, down from 19.7% in 2023[206]. - Operating income for 2024 was $611.1 million, down from $657.1 million in 2023, reflecting a decrease of 7.0%[233]. - Basic earnings per share for 2024 were $5.02, down from $5.52 in 2023, representing a decrease of 9.1%[233]. - Diluted earnings per share (EPS) for 2024 was $4.99, down from $5.47 in 2023, while adjusted EPS decreased to $5.79 from $7.05[209]. - The company reported a comprehensive income attributable to The Timken Company of $192.3 million in 2024, significantly lower than $422.5 million in 2023[234]. - Net income for 2024 was $375.3 million, down from $408.0 million in 2023, representing a decrease of about 8.0%[237]. Segment Performance - The Engineered Bearings segment serves various industries, including wind energy, agriculture, and aerospace, while the Industrial Motion segment includes products like industrial drives and automatic lubrication systems[126]. - Engineered Bearings segment net sales decreased by $223.4 million or 6.9% in 2024 compared to 2023, primarily due to lower demand in China and Europe[145]. - Adjusted EBITDA for the Engineered Bearings segment decreased by $74.4 million or 10.9% in 2024 compared to 2023, primarily due to lower sales net of cost of products sold[146]. - Industrial Motion segment net sales increased by $27.4 million or 1.8% in 2024 compared to 2023, driven by acquisitions[148]. - Adjusted EBITDA for the Industrial Motion segment decreased by $13.3 million or 4.2% in 2024 compared to 2023, primarily due to lower sales net of cost of products sold[149]. Cash Flow and Debt Management - Net cash provided by operating activities decreased by $69.5 million to $475.7 million in 2024 compared to 2023[152]. - Net cash used in investing activities decreased by $501.9 million to $304.6 million in 2024 compared to 2023, primarily due to a decrease in cash used for acquisitions[155]. - Total debt decreased to $2,062.7 million in 2024 from $2,395.9 million in 2023, while net debt decreased to $1,689.5 million from $1,977.0 million[157]. - The ratio of net debt to capital improved to 36.1% in 2024 from 42.2% in 2023, indicating a stronger financial position[158]. - The Company had $373.2 million in cash and cash equivalents as of December 31, 2024, with $843.9 million available under committed credit lines[159]. - The Company plans to fund investments in attractive market sectors with cash and cash equivalents and unused lines of credit[159]. - The Company entered into a $750 million unsecured revolving credit facility and a $400 million unsecured term loan facility, both maturing on December 5, 2027[160]. - The Company expects to generate a higher amount of cash from operating activities in 2025 compared to 2024, driven by improved working capital performance and lower capital expenditures, estimated at 3.5% of sales[165]. Acquisitions and Investments - Timken acquired CGI, Inc. in September 2024, enhancing its industrial motion product portfolio, particularly in medical robotics[128]. - The Company acquired CGI for $167.1 million, enhancing its product portfolio in medical robotics[269]. - In 2023, the Company completed six acquisitions, including Lagersmit for $128.2 million and Des-Case for $123.2 million, contributing to its Industrial Motion segment[270]. - The total purchase price for the three acquisitions in November 2023 was $95.7 million, net of cash acquired[271]. - Goodwill for the 2024 acquisitions was $61.4 million, while total assets acquired amounted to $206.2 million[272]. - The Company incurred acquisition-related costs of $2.0 million for the CGI acquisition, recorded in selling, general and administrative expenses[269]. Tax and Pension Obligations - The effective tax rate for 2024 was 24.1%, an increase of 1.0% from 23.1% in 2023, primarily due to higher effective tax rates in foreign jurisdictions[138][140]. - The Company made cash contributions of $24.6 million to its defined benefit pension plans in 2024[168]. - The Company recognized a net periodic benefit cost of $12.2 million for defined benefit pension plans in 2024, down from $33.8 million in 2023, with a net mark-to-market gain of $0.7 million in 2024 compared to a charge of $21.6 million in 2023[192][193]. - The expected net periodic benefit cost for 2025 is approximately $14 million, reflecting an increase from $12.2 million in 2024, primarily due to higher expected interest costs[193]. - The Company plans to contribute approximately $38 million to its defined benefit pension plans in 2025, up from $24.6 million in 2024, with $8 million expected to be contributed to the U.K. pension plan[194]. Environmental and Social Responsibility - The Company aims to reduce Scope 1 and Scope 2 greenhouse gas emissions intensity by 50% by 2030, as part of its corporate social responsibility initiatives[128]. Foreign Currency and Market Risks - The company recognized a foreign currency exchange loss of $9.3 million for the year ended December 31, 2024, compared to a loss of $14.8 million in 2023[218]. - Foreign currency translation adjustments resulted in a loss of $161.2 million in 2024, compared to a gain of $33.5 million in 2023[234]. - The company had $471.6 million of hedges in place as of December 31, 2024, to mitigate foreign currency exchange rate risks[229]. - A hypothetical 10% weakening of the U.S. dollar would have resulted in a benefit of $11.9 million related to hedges[229]. Management Changes - On March 26, 2024, the company announced the retirement of CEO Richard G. Kyle, with Tarak Mehta appointed as the new CEO effective September 5, 2024[219].

Core Viewpoint - The Timken Company reported a decline in earnings and revenues for the fourth quarter of 2024, primarily due to lower demand in Europe and unfavorable currency translation, despite beating consensus estimates for earnings and revenues [1][2][11]. Financial Performance - Adjusted EPS for Q4 2024 was $1.16, exceeding the Zacks Consensus Estimate of $0.97, but reflecting a 15% year-over-year decline [1] - Reported EPS was $1.01 compared to $0.83 in the prior-year quarter [2] - Total revenues for Q4 were $1.07 billion, down 1.6% year-over-year, but above the Zacks Consensus Estimate of $1.06 billion [2][11] - Organic sales decreased by 2.6% [2] Cost and Margin Analysis - Cost of sales decreased by 1.5% to $749 million, while gross profit fell by 2% year-over-year to $325 million [3] - Gross margin was 30.3%, slightly down from 30.4% in the previous year [3] - Adjusted EBITDA declined by 9% year-over-year to $178 million, with an adjusted EBITDA margin of 16.6%, a contraction of 130 basis points from the prior year [4] Segment Performance - Engineered Bearings segment revenues fell by 2% year-over-year to $708 million, impacted by lower demand in Europe and unfavorable currency translation [5] - Adjusted EBITDA for the Engineered Bearings segment was $122 million, down 8% from the previous year [6] - Industrial Motion segment revenues declined by 0.3% year-over-year to $366 million, missing projections [7] - Adjusted EBITDA for the Industrial Motion segment was $71 million, down from $82 million in the previous quarter [8] Cash Flow and Balance Sheet - Cash and cash equivalents at the end of 2024 were $373 million, down from $419 million at the end of 2023 [9] - Cash flow from operating activities was $476 million, compared to $545 million in the prior year [9] - Long-term debt increased to $2.19 billion from $1.79 billion year-over-year [9] Dividend and Shareholder Returns - The company increased its quarterly dividend by 3% to $0.34 per share, marking the eleventh consecutive year of higher annual dividends [10] - Total returns to shareholders through dividends and share repurchases amounted to $136.6 million during the year [10] 2024 Performance Overview - For 2024, adjusted earnings were $5.79 per share, surpassing the Zacks Consensus Estimate of $5.61, but reflecting an 18% decline from the prior year [11] - Total revenues fell by 4% year-over-year to $4.57 billion, although this figure beat the Zacks Consensus Estimate of $4.56 billion [11][12] 2025 Guidance - For 2025, the company expects total revenues to decline by 1-4% from 2024 levels, with organic sales anticipated to decrease by 1% at the midpoint [13] - Adjusted EPS guidance for 2025 is between $5.30 and $5.80, indicating a year-over-year decline of 4% [14] - Cost-reduction actions are expected to yield savings of approximately $75 million in 2025 [14] Stock Performance - Over the past year, TKR shares have gained 2.1%, contrasting with a 31% decline in the industry [15]

Financial Data and Key Metrics Changes - Overall revenue decreased by 1.6% year-over-year, with organic revenue down 2.5% primarily due to weak demand in Europe [9][34] - Adjusted EBITDA margins were reported at 16.6%, down 130 basis points from the previous year and 30 basis points from the third quarter [10][39] - Adjusted earnings per share (EPS) was $1.16, reflecting a 15% decline from last year [10][44] - Free cash flow for the fourth quarter was $125 million, totaling approximately $300 million for the full year [11][53] Business Line Data and Key Metrics Changes - Engineered Bearings sales were $708 million, down 2.3% year-over-year, with organic sales down 1.1% due to lower demand in Europe [46] - Industrial Motion sales were $366 million, a slight decline from last year, with organic sales down 5.6% [49] - Adjusted EBITDA for Engineered Bearings was $121 million (17.2% of sales), while Industrial Motion's adjusted EBITDA was $71 million (19.3% of sales) [48][51] Market Data and Key Metrics Changes - The Americas region showed resilience with a 2% increase in revenue, while Asia Pacific was down 3%, primarily due to a decline in China [37] - EMEA experienced an 11% decline due to an industrial slowdown in Western Europe [38] - The overall market conditions in Europe are expected to remain challenging, impacting the company's outlook for 2025 [12][55] Company Strategy and Development Direction - The company is focusing on becoming more customer-centric rather than product-centric, aiming to tailor products to local market needs [22][118] - Plans include prioritizing R&D and resources for higher growth and profitability segments, while reducing vertical integration across the portfolio [23][111] - The company is also looking at accretive M&A opportunities to enhance its presence in growing markets [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious outlook for 2025 due to ongoing economic uncertainty and weak demand in Europe, expecting organic sales to be slightly lower [12][55] - The company anticipates adjusted EPS to be modestly down from 2024, primarily due to unfavorable currency impacts [14][58] - Management highlighted the importance of cost savings initiatives, expecting to deliver around $75 million in incremental savings in 2025 [14][96] Other Important Information - The company plans to continue its disciplined approach to capital allocation, focusing on investments with the highest returns [16][60] - A new plant expansion in Baruch, India, is expected to support growth in the industrial bearings business [24] - The planned retirement of Chris Copeland, a key leader in the industrial motions business, was acknowledged, with a search for his successor underway [30][31] Q&A Session Summary Question: Outlook for 2025 and market conditions - Management maintains a cautious outlook for 2025, primarily due to weak demand in Europe, despite some positive indicators like the ISM [75][78] Question: Impact of tariffs on COGS - Tariffs from Canada and Mexico could present a mid-single-digit million dollar headwind monthly, but the company expects to mitigate these impacts over time [82] Question: Book to bill ratio and backlog size - The order book is down year-over-year, but remains supportive of the full-year guidance, with expected organic sales decline similar to the fourth quarter [88][90] Question: Actions for cost savings beyond the $75 million - Management indicated that further actions will be detailed later in the year, focusing on portfolio adjustments and cost-saving measures [95][96] Question: Cross-selling opportunities - The company sees significant potential in cross-selling, particularly with recent acquisitions, but specific numbers will be provided later [157] Question: Renewable energy projects in Asia - Renewable energy sales are expected to remain flat in 2025, with the market stabilizing at lower levels [159]

4Q 2024 Earnings Investor Presentation February 5, 2025 The Timken Company Agenda | Introduction | Neil Frohnapple Vice President of Investor Relations | | --- | --- | | Overview and Business Update | Tarak Mehta President and Chief Executive Officer | | Financial Review | Phil Fracassa | | | Executive Vice President and Chief Financial Officer | | Q&A | Question and Answer Session | 2 Forward-Looking Statements Safe Harbor and Non-GAAP Financial Information 4Q 2024 Performance Highlights 5 Sales of $1.07 b ...

Timken (TKR) reported $1.07 billion in revenue for the quarter ended December 2024, representing a year-over-year decline of 1.6%. EPS of $1.16 for the same period compares to $1.37 a year ago.The reported revenue represents a surprise of +1.04% over the Zacks Consensus Estimate of $1.06 billion. With the consensus EPS estimate being $0.98, the EPS surprise was +18.37%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expe ...

Timken (TKR) came out with quarterly earnings of $1.16 per share, beating the Zacks Consensus Estimate of $0.98 per share. This compares to earnings of $1.37 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 18.37%. A quarter ago, it was expected that this maker of bearings and power transmissions would post earnings of $1.37 per share when it actually produced earnings of $1.23, delivering a surprise of -10.22%.Over the last fo ...