Timken(US:TKR)2023-02-16 21:33Financial Performance - Timken Company reported net sales of $4.5 billion in 2022, an increase of 8.8% from $4.1 billion in 2021, driven by strong organic growth and acquisitions[129]. - Net income for 2022 was $417 million, up 9.3% from $381.5 million in 2021, with diluted earnings per share increasing by 14.4% to $5.48[129]. - The Company reported net sales of $4,496.7 million for the year ended December 31, 2022, an increase of 8.8% from $4,132.9 million in 2021[236]. - Adjusted net income for 2022 was $447.8 million, compared to $363.4 million in 2021, reflecting a growth of 23.3%[207]. - Adjusted EBITDA for 2022 was $855.9 million, with an adjusted EBITDA margin of 19.0% of net sales, compared to 17.4% in 2021[207]. - Free cash flow for 2022 was $285.4 million, an increase from $239.0 million in 2021, reflecting a 19.4% growth[213]. - Net income for the trailing twelve months ended December 31, 2022, was $417.0 million, compared to $381.5 million in 2021, marking a 9.3% increase[215]. - Total assets increased to $5,772.4 million in 2022, up from $5,170.7 million in 2021, representing a growth of 11.7%[239]. - Total liabilities increased to $3,420.0 million in 2022, compared to $2,793.0 million in 2021, representing a growth of 22.4%[239]. Segment Performance - The Company reported net sales of $2,106.5 million in the Mobile Industries segment for 2022, an increase of $140.8 million or 7.2% compared to 2021[148]. - In the Process Industries segment, net sales reached $2,390.2 million in 2022, reflecting a $223.0 million increase or 10.3% from 2021[149]. - The Mobile Industries segment's EBITDA decreased by $23.0 million or 9.6% in 2022, primarily due to higher operating costs[148]. - The Process Industries segment's EBITDA increased by $115.2 million or 22.8% in 2022, driven by favorable price/mix and higher volume[149]. - Total EBITDA for reportable segments increased to $838.6 million in 2022, compared to $746.4 million in 2021, reflecting a growth of 12.3%[299]. Acquisitions and Investments - Timken completed the acquisition of GGB Bearing Technology, expected to generate annual sales of approximately $200 million, and Spinea, enhancing its robotics and automation offerings[131]. - The Company completed several acquisitions in 2022, including GGB and Spinea, which contributed to the growth in net sales[147]. - The Company acquired GGB for $302.5 million, with an estimated revenue of approximately $200 million for the full year 2022[279]. - The Company also acquired Spinea for $151.2 million, with estimated 2022 full year sales of approximately $40 million[279]. - Total assets acquired in 2022 amounted to $545.7 million, with net assets acquired totaling $453.7 million[282]. Cash Flow and Debt - The Company had net cash provided by operating activities of $463.8 million in 2022, up $76.5 million from 2021[151]. - Net cash used in investing activities increased by $399.5 million in 2022, primarily due to acquisitions totaling $446.2 million[154]. - The Company's net debt increased to $1,631.6 million in 2022 from $1,207.8 million in 2021, resulting in a net debt to capital ratio of 40.9%[158]. - The Company expects higher net interest expense in 2023 compared to 2022 due to increased average debt balances and interest rates[165]. - Total debt rose to $1,963.2 million in 2022 from $1,464.9 million in 2021, reflecting a significant increase in leverage[219]. Shareholder Returns - The Company repurchased 3.25 million common shares, returning a total of $303 million to shareholders through dividends and share repurchases in 2022[131]. - The Company declared a quarterly cash dividend of $0.31 per common share, marking the 403rd consecutive quarterly dividend[226]. - The company paid cash dividends of $91.7 million to shareholders in 2022, compared to $92.2 million in 2021, a decrease of 0.5%[240]. - The company declared dividends of $1.23 per share in 2022, up from $1.19 per share in 2021, reflecting a 3.4% increase[241]. Expenses and Charges - Selling, general and administrative expenses rose by 9.8% to $637.1 million in 2022, primarily due to higher compensation costs[134]. - Impairment and restructuring charges totaled $44.1 million in 2022, significantly higher than $8.9 million in 2021, mainly due to the ADS divestiture[135]. - Interest expense increased by 26.9% to $74.6 million in 2022, attributed to higher average debt and rising interest rates[137]. - The effective tax rate for 2022 was 24.3%, an increase of 4.3% from 20.0% in 2021, primarily due to unfavorable earnings in foreign jurisdictions[140]. Pension and Benefits - The Company recognized a net periodic benefit cost of $21.0 million for defined benefit pension plans in 2022, compared to $5.9 million in 2021[193]. - The Company expects net periodic benefit cost for defined benefit pension plans to be approximately $12 million in 2023, excluding mark-to-market charges[194]. - The Company recognized a net periodic benefit credit of $21.6 million for other postretirement benefit plans in 2022, up from $12.5 million in 2021[198]. - The Company expects a net periodic benefit credit of approximately $6 million for other postretirement benefit plans in 2023, a decrease from $21.6 million in 2022[199]. Currency and Foreign Operations - The company recorded a foreign currency exchange gain of $15.4 million for the year ended December 31, 2022, contrasting with losses in the previous two years[223]. - The company reported foreign currency translation adjustments of $(162.7) million in 2022, compared to $(63.7) million in 2021, showing a significant increase in losses due to currency fluctuations[241]. - The Company anticipates potential future asset impairments or write-offs related to ongoing geopolitical events in Russia and Ukraine[224]. Assets and Liabilities - As of December 31, 2022, the Company had $331.6 million in cash and cash equivalents, with $828.2 million available under committed credit lines[159]. - Total current assets increased to $2,504.0 million in 2022, up from $2,213.5 million in 2021, reflecting a growth of 13.1%[239]. - Long-term debt increased significantly to $1,914.2 million in 2022, compared to $1,411.1 million in 2021, a rise of 35.5%[239]. - The company had $1,620.0 million in undistributed foreign earnings as of December 31, 2022, compared to $1,249.1 million in 2021[305].