Timken(US:TKR)2025-02-20 17:50Financial 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].