Timken(US:TKR)2021-04-28 20:00Financial Performance - Net sales for the three months ended March 31, 2021, increased by $102.0 million, or 11.0%, compared to the same period in 2020, driven by higher organic revenue, favorable foreign currency exchange rates, and the Aurora acquisition [80]. - Net income attributable to The Timken Company for the three months ended March 31, 2021, was $113.3 million, reflecting a $32.6 million increase, or 40.4%, compared to the same period in 2020 [80]. - The Company expects full-year revenue for 2021 to increase approximately 18% compared to 2020, primarily due to higher organic revenue across both Mobile Industries and Process Industries segments [83]. - Gross profit for the three months ended March 31, 2021, was $299.2 million, an increase of $20.3 million, or 7.3%, compared to the same period in 2020 [86]. - For the three months ended March 31, 2021, net sales were $1,025.4 million, an increase of 11.1% compared to $923.4 million for the same period in 2020 [127]. - Net income attributable to The Timken Company for Q1 2021 was $113.3 million, up from $80.7 million in Q1 2020, representing a 40.3% increase [127]. - Adjusted EBITDA for the three months ended March 31, 2021, was $203.7 million, compared to $177.0 million in Q1 2020, reflecting a 15.1% increase [127]. - The adjusted EBITDA margin for Q1 2021 was 19.9%, compared to 19.2% in Q1 2020 [127]. - Net income for the trailing twelve months ended March 31, 2021, was $324.4 million, compared to $292.4 million for the trailing twelve months ended December 31, 2020 [133]. Cash Flow and Expenditures - Operating cash flow is projected to be in the range of $475 million to $500 million for 2021, down from $577.6 million in 2020, due to changes in working capital [84]. - Capital expenditures are expected to be approximately $150 million in 2021, representing about 3.6% of sales, compared to $122 million in 2020 [84]. - Free cash flow for the three months ended March 31, 2021, was $2.3 million, a decrease from $24.4 million in Q1 2020 [131]. - The company expects to generate cash from operating activities in the range of $475 million to $500 million in 2021, down from $577.6 million in 2020 [117]. - Capital expenditures are projected to be approximately $150 million in 2021, compared to $122 million in 2020 [117]. Segment Performance - Mobile Industries segment net sales increased by $37.8 million or 8.1% to $504.5 million for the three months ended March 31, 2021, compared to $466.7 million in 2020 [99]. - Process Industries segment net sales rose by $64.2 million or 14.1% to $520.9 million for the same period, driven by increased demand in renewable energy and industrial sectors [100]. - EBITDA for the Mobile Industries segment increased by $4.5 million or 6.0% to $79.6 million, while EBITDA for the Process Industries segment rose by $23.5 million or 21.9% to $131.0 million [99][100]. Debt and Financial Ratios - Total debt as of March 31, 2021, was $1,602.0 million, up from $1,564.6 million at the end of 2020, with net debt increasing to $1,299.7 million [108]. - The ratio of net debt to capital increased to 36.6% as of March 31, 2021, compared to 35.9% at the end of 2020 [109]. - The ratio of net debt to adjusted EBITDA remained flat at 1.9 as of March 31, 2021, consistent with December 31, 2020 [132]. Tax and Expenses - Selling, general and administrative expenses decreased by $9.1 million, or 5.9%, to $144.5 million for the three months ended March 31, 2021, primarily due to lower discretionary spending [87]. - The effective tax rate for the three months ended March 31, 2021, was 17.9%, a decrease of 820 basis points from 26.1% in the same period of 2020 [94]. - Unallocated corporate expenses increased by $0.5 million to $(11.6) million, representing 1.1% of net sales [101]. Risks and Market Conditions - The company emphasizes the potential impact of global economic conditions, including a slowdown and geopolitical risks, on its operations and financial performance [135]. - COVID-19 and other pandemics have negatively affected customer demand, supply chains, and employee availability, posing risks to the company's business [135]. - The company faces competitive pressures from both domestic and international competitors, which may affect market penetration and pricing strategies [135]. - Changes in operating costs, including raw material prices and labor costs, are critical factors influencing the company's financial results [135]. - The success of the company's capital investments and integration of acquired companies is essential for achieving satisfactory operating results [135]. - The company must maintain favorable credit ratings and manage its debt obligations to ensure financial stability [135]. - The company is exposed to market risks related to interest rates and capital market conditions, which could affect its cost of funds [138]. - The company has identified various risk factors in its Annual Report that could materially impact future results [136]. - The company does not undertake any obligation to publicly update or revise forward-looking statements, highlighting the uncertainty in predicting future performance [137]. - There have been no material changes in reported market risk since the last Annual Report, indicating stability in this area [138]. Foreign Currency Impact - Foreign currency translation adjustments for Q1 2021 resulted in a negative impact of $44.0 million, an improvement from a negative $71.3 million in Q1 2020 [122]. - The company recorded net losses of $2.1 million from foreign currency exchange for Q1 2021, compared to net gains of $0.1 million in Q1 2020 [123]. Earnings Per Share - Diluted earnings per share for Q1 2021 were $1.47, an increase from $1.06 in Q1 2020 [128].