Timken(US:TKR)2019-02-15 21:34Financial Performance - Timken reported net sales of $3.58 billion in 2018, an increase of 19.2% compared to $3.00 billion in 2017, driven by organic revenue growth and acquisitions[111]. - The company's net income for 2018 was $305.5 million, a 51.0% increase from $202.3 million in 2017, attributed to improved performance and higher volume[111]. - Gross profit increased to $1.04 billion in 2018, up 28.1% from $812.1 million in 2017, with a gross profit margin of 29.0%[116]. - Net sales for 2018 were $1,903.7 million, an increase of 16.1% from $1,640.0 million in 2017[128]. - EBIT for 2018 was $198.7 million, reflecting a 42.9% increase from $139.0 million in 2017[128]. - Operating income for 2018 was $454.5 million, up from $299.5 million in 2017, reflecting a year-over-year increase of 51.8%[246]. - The Company reported a net income attributable to it of $302.8 million in 2018, contributing to an increase in earnings invested in the business by 15.7% to $1,630.2 million[175]. - Net income for the year ended December 31, 2018, was $305.5 million, an increase from $202.3 million in 2017, representing a 50.9% growth[251]. - The company’s net income attributable to The Timken Company for 2018 was $302.8 million, an increase of 48.8% from $203.4 million in 2017[250]. Sales and Revenue Growth - The company expects 2019 full-year sales to increase by 8% to 10% compared to 2018, primarily due to increased demand and the benefits of acquisitions[112]. - The Mobile Industries segment's net sales, excluding acquisitions and currency effects, increased by 10.2% to $1,807.4 million in 2018[130]. - Full-year sales for the Mobile Industries segment are expected to rise approximately 4% to 6% in 2019 compared to 2018[131]. - The Process Industries segment's net sales increased by 23.0% to $1,677.1 million in 2018, with EBIT rising 50.2% to $333.8 million[132]. - Full-year sales for the Process Industries segment are projected to grow approximately 13% to 15% in 2019 compared to 2018[133]. Acquisitions - Timken completed three significant acquisitions in 2018: ABC Bearings for approximately $30 million, Cone Drive for about $100 million, and Rollon for approximately $140 million[110]. - The Company acquired multiple businesses, including ABC Bearings and Cone Drive, contributing to growth in the Mobile Industries segment[131]. - The company made acquisitions totaling $765.4 million in 2018, compared to $346.8 million in 2017, indicating a substantial increase of 120.0%[250]. - The company completed three acquisitions in 2018, with total purchase prices amounting to $834.3 million, including $540.0 million for Rollon[298]. - The total assets acquired in 2018 were valued at $1,044.8 million, with goodwill accounting for $465.0 million[301]. Expenses and Costs - Selling, general and administrative expenses rose to $580.7 million in 2018, a 14.2% increase from $508.3 million in 2017[117]. - Interest expense increased by 39.4% to $51.7 million in 2018, primarily due to higher outstanding debt from acquisitions[118]. - Corporate expenses increased by 26.3% to $62.0 million in 2018, primarily due to acquisition-related costs[134]. - Stock-based compensation expense increased to $32.3 million in 2018 from $24.7 million in 2017, marking a 30.7% rise[251]. Capital Expenditures and Cash Flow - Timken's capital expenditures for 2019 are expected to be approximately $150 million, up from $113 million in 2018[113]. - The company anticipates generating operating cash of about $450 million in 2019, a 35% increase from 2018[113]. - Net cash provided by operating activities rose by $95.7 million to $332.5 million, primarily due to a $103.2 million increase in net income[177]. - Cash used in investing activities increased by $416.5 million to $865.2 million, mainly due to acquisitions[177]. - The Company expects to generate operating cash of approximately $450 million in 2019, an increase of 35% from 2018[193]. Tax and Regulatory - The effective tax rate for 2018 was 25.1%, an increase of 2.9% from 22.2% in 2017, influenced by earnings in higher-tax jurisdictions[120]. - The Company recorded $3.2 million of net tax benefits for uncertain tax positions in 2018, which included $6.6 million related to the net reversal of accruals for prior year uncertain tax positions[215]. Assets and Liabilities - Total current assets increased by $237.1 million, or 15.8%, reaching $1,737.2 million as of December 31, 2018[163]. - Long-term debt rose to $1,638.6 million, a 91.8% increase from $854.2 million in 2017, primarily due to new borrowings for acquisitions[170]. - Total assets increased to $4,445.2 million in 2018, up from $3,402.4 million in 2017, representing a growth of 30.7%[248]. - Total liabilities assumed from acquisitions in 2018 amounted to $210.5 million[301]. Shareholder Returns - The Company declared a quarterly cash dividend of $0.28 per common share on February 6, 2019, marking the 387th consecutive quarterly dividend[237]. - The company paid cash dividends of $85.7 million to shareholders in 2018, slightly up from $83.3 million in 2017, an increase of 2.9%[250]. - The company declared dividends of $1.11 per share in 2018, up from $1.07 per share in 2017, reflecting a 3.7% increase[252]. Pension and Benefits - The Company made cash contributions of approximately $11.3 million to its global defined benefit pension plans in 2018 and expects to contribute approximately $34 million in 2019[198]. - The expected net periodic benefit cost for defined benefit pension plans in 2019 is $9.2 million, compared to $35.0 million in 2018[223]. - The Company plans to contribute approximately $34 million to its defined benefit pension plans in 2019, an increase from $11.3 million in 2018[224]. - The Company recognized actuarial losses of $38.8 million in 2018 primarily due to lower than expected returns on plan assets of $83.4 million[222].