Timken Reports Third-Quarter Results.
* Cost controls and working-capital management drive third-quarter earnings and cash flow
* Company increases full-year earnings estimate
* Needle Roller Bearings A needle roller bearing is a bearing which uses small cylindrical rollers. They are used to reduce friction of a rotating surface.
Needle bearing have a large surface area that is in contact with the bearing outer surfaces compared to ball bearings Additionally there is less business sale on track for year-end completion
CANTON, Ohio Canton is a city in the U.S. state of Ohio and the county seat of Stark CountyGR6. The municipality is located in northeastern Ohio and is situated on the Nimishillen Creek, approximately 24 miles (38 km) south of Akron -- The Timken Company The Timken Company (NYSE: TKR) is a major manufacturer of tapered roller bearings and specialty steels located in Canton, Ohio. Their products are used in transportation, industrial equipment, electronics, mining and drilling, and in military applications. (NYSE NYSE
See: New York Stock Exchange : TKR TKR Total Knee Replacement
TKR Team Knight Rider (TV show)
TKR Team Kiwi Racing
TKR Tusen Kronor (Swedish currency)
TKR Te Kohanga Reo (New Zealand) ) today reported sales of $763.6 million for the third quarter of 2009, a decrease of 43 percent over the same period a year ago. The sales decline reflects weaker demand in many of the company's end markets and lower surcharges, partially offset by improved pricing. Sales for all periods exclude the results of the Needle Roller Bearings business, accounted for as "discontinued operations Discontinued operations
Divisions of a business that have been sold or written off and that no longer are maintained by the business. ."
The company incurred a third-quarter loss of $50.1 million, or $0.52 per share, including a loss of $30.8 million, or $0.32 per share, from the Needle Roller Bearings business. The company's continuing operations continuing operations
Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the incurred a loss of $19.3 million, or $0.20 per share, in the third quarter, compared with income of $123.9 million, or $1.28 per diluted di·lute
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.
2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, a year ago.
Excluding special items, net income was $5.2 million, or $0.05 per share, for the third quarter, including a loss of $2.3 million, or $0.03 per share, from discontinued operations. Income from the company's continuing operations for the third quarter was $7.5 million, or $0.08 per share, excluding special items, compared with $129.2 million, or $1.34 per diluted share, in the prior year. Earnings reflect lower sales volume and manufacturing utilization, reduced surcharges and lower LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO.
LIFO - stack (last-in, first-out last-in, first-out
A method of inventory accounting in which the most recently acquired items are assumed to have been the first sold. In a period of rising prices, this method yields a lower ending inventory, a higher cost of goods sold, a lower accounting) income. These items were partially offset by cost reductions, improved pricing and lower material costs compared with a year ago.
Special items, net of tax, in the third quarter of 2009 amounted to $55.4 million of expense, compared with $5.5 million in the same period last year. Special items in the third quarter of 2009 included manufacturing rationalization rationalization, in psychology: see defense mechanism. , impairment Impairment
1. A reduction in a company's stated capital.
2. The total capital that is less than the par value of the company's capital stock.
1. This is usually reduced because of poorly estimated losses or gains.
2. and restructuring charges restructuring charge
The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , the largest being a $25.1-million impairment, net of tax, associated with the pending sale of the Needle Roller Bearings business.
"This quarter's performance is more about how we're managing the business than a shift in marketplace trends," said James W. Griffith, Timken president and chief executive officer. "Without the benefit of improved volume, we're yielding better results from structural changes we've made, in part from our Project O.N.E. and portfolio management initiatives."
In recent months, the company also:
* Signed an agreement to sell the assets of its Needle Roller Bearings business to JTEKT Corporation, for which Timken will receive approximately $330 million, subject to certain closing conditions;
* Announced plans to streamline its distribution footprint by consolidating its Ohio and South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures
Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. distribution centers into a new facility;
* Entered into a three-year, $500-million unsecured Senior Credit Facility, replacing a previous facility set to expire in June 2010;
* Completed a $250-million public offering of 6.00% unsecured Senior Notes due 2014, proceeds of which will be used to repay the company's 5.75% notes due February 15, 2010;
* Expanded its ability to offer engineered steel solutions in Asia through collaboration with Daido Steel Co. Ltd.; and
* Reached a tentative four-year labor agreement with the United Steelworkers United Steelworkers (USW)
historic labour union representing workers in steel, aluminum, and other metallurgical industries for much of the 20th century. In the U.S. union, covering approximately 2,300 associates in Canton, Ohio.
The company continues to maintain a strong balance sheet with ample liquidity. Total debt was $800.9 million as of Sept. 30, 2009, or 33.5 percent of capital. Net debt at Sept. 30, 2009, was $169.9 million, or 9.6 percent of capital, compared with $490.5 million, or 22.8 percent, as of Dec. 31, 2008. During the quarter the company generated cash from operating activities of $170.9 million, driven primarily by inventory reductions.
Nine Months' Results
For the first nine months of 2009, sales were $2.37 billion, a decrease of 40 percent from the same period in 2008. The company incurred a loss of $0.56 per share from continuing operations for the first nine months of 2009, compared with earnings of $2.87 per diluted share last year. Special items, net of tax, in the first nine months of 2009 totaled $81.4 million of expense, compared with $3.0 million in the prior-year period. Special items in 2009 primarily reflect impairment and severance charges, while prior-year special items included a gain on a real estate divestment divestment to strip one's investment from an entity. associated with a prior plant closure, offset by charges related to restructuring, rationalization and impairment. Excluding special items, year-to-date income from continuing operations was $0.22 per diluted share, versus earnings of $2.91 per diluted share in the same period last year. During the first nine months of 2009, the company was affected by weaker demand across most of its end markets, partially offset by pricing and cost-reduction initiatives.
The following business results reflect continuing operations, excluding special items:
Bearings and Power Transmission Group Results
The Bearings and Power Transmission Group had third-quarter sales of $614.8 million, down 28 percent from $849.1 million for the same period last year. Earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.
EBIT = Operating Revenue – Operating Expenses + Non-operating Income (EBIT EBIT
See: Earnings Before Interest and Taxes
See earnings before interest and taxes (EBIT). ) for the third quarter were $48.9 million, down 47 percent from $91.8 million in the third quarter of 2008.
For the first nine months of 2009, Bearings and Power Transmission Group sales Group sales
Block sale (of large amounts) of securities to institutional investors.
The distribution of a new security issue to institutional clients. were $1.86 billion, down 28 percent from the same period a year ago. EBIT for the first nine months of 2009 was $150.0 million, or 8.1 percent of sales, compared with EBIT of $248.4 million, or 9.6 percent of sales, in the first nine months of 2008.
Mobile Industries Segment Results
In the third quarter, Mobile Industries sales were $327.6 million, a decrease of 23 percent from $426.5 million for the same period a year ago. The sales decline was driven by weaker demand in the off-highway, heavy-truck and rail market sectors, partially offset by favorable fa·vor·a·ble
1. Advantageous; helpful: favorable winds.
2. Encouraging; propitious: a favorable diagnosis.
3. pricing. Light-vehicle demand was up slightly compared with a year ago, driven by the emergence of automotive customers from bankruptcy and consumer stimulus programs, which accelerated demand during the quarter.
Third-quarter EBIT was $13.7 million, an increase of 58 percent from $8.7 million for the same period a year ago. The benefits from cost reduction initiatives and pricing were partially offset by the impact of lower global demand and underutilized capacity.
For the first nine months of 2009, Mobile Industries sales of $920.4 million were down 34 percent from the same period a year ago. EBIT for the first nine months was a loss of $0.6 million, or 0.1 percent of sales, compared with EBIT of $43.4 million, or 3.1 percent of sales, in the first nine months of 2008.
Process Industries Segment Results
Process Industries had third-quarter sales of $187.0 million, down 41 percent from $317.9 million for the same period a year ago. Lower demand across most industrial market sectors more than offset favorable pricing. Sales declines were significant in both original equipment and distribution channels.
Third-quarter EBIT was $16.1 million, down 78 percent from $73.3 million in the same period a year ago. Lower EBIT primarily resulted from volume, partially offset by pricing and cost reduction initiatives.
For the first nine months of 2009, Process Industries sales were $619.1 million, down 31 percent from the same period a year ago. EBIT for the first nine months was $94.6 million, or 15.3 percent of sales, compared with EBIT of $180.9 million, or 20.2 percent of sales, in the same period a year ago.
Aerospace and Defense Segment Results
Aerospace and Defense had third-quarter sales of $100.3 million, down 4 percent from $104.7 million for the same period last year. The decrease was driven by reduced demand across commercial and civil aerospace markets, partially offset by pricing and acquisitions.
Third-quarter EBIT was $19.1 million, up 95 percent from $9.8 million in the same period a year ago. Performance benefited primarily from cost-reduction initiatives and pricing.
For the first nine months of 2009, Aerospace and Defense sales were $318.8 million, up 5 percent from the same period a year ago. The EXTEX EXTEX Extrudable Explosive acquisition accounted for approximately one-half of the sales increase. EBIT for the first nine months of 2009 was $56.0 million, or 17.6 percent of sales, compared with EBIT of $24.0 million, or 8.0 percent of sales, in the first nine months of 2008.
Steel Group Results
Sales for the Steel Group, including inter-group sales, were $157.9 million during the third quarter, a decrease of 71 percent from $536.5 million for the same period last year, with 53 percent fewer shipped tons. The greatest market declines were from the industrial and energy sectors, while light vehicle demand was up slightly compared with a year ago due to consumer stimulus programs in the U.S. Surcharges declined approximately $215 million from the third quarter last year.
The Steel Group incurred an EBIT loss of $20.3 million compared with EBIT of $133.8 million for the same period a year ago. The decline primarily resulted from lower demand and underutilization of manufacturing capacity, which affected EBIT by roughly $100 million. The remaining decline in EBIT resulted from lower surcharges and reduced LIFO income, partially offset by favorable material and energy costs and cost-reduction actions.
For the first nine months of 2009, Steel Group sales were $541.4 million, down 63 percent from the same period a year ago. Year-to-date, the Steel Group incurred an EBIT loss of $60.4 million, or 11.2 percent of sales, compared with EBIT of $267.5 million, or 18.1 percent of sales in the same period last year.
Timken's sales for the full year 2009, excluding discontinued operations, are expected to be down approximately 35 to 40 percent from the prior year, principally due to weak end-market demand. Mobile Industries sales are expected to be down approximately 30 to 35 percent for the year, driven by lower North American North American
named after North America.
North American blastomycosis
see North American blastomycosis.
North American cattle tick
see boophilusannulatus. light-vehicle production, and significant declines in heavy-truck builds in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe. Process Industries sales are expected to be down by about 30 to 35 percent in 2009, with broad-based volume declines in most end markets, especially heavy industrial equipment. Sales in the Aerospace and Defense segment are expected to be up modestly for 2009, driven by a strong defense sector, offsetting softer commercial and civil sectors. Steel Group sales are expected to decline approximately 60 to 65 percent for the year due to lower demand across all market sectors and reduced surcharges.
The company is raising its full-year earnings estimate (including discontinued operations and excluding special items), to a loss of $(0.10) to $(0.30) per share, compared with its prior estimate of a loss of $(0.40) to $(0.90) per share. The company expects to deliver strong free cash flow in 2009, driven by effective working capital management and reduced spending.
Conference Call Information
The company will host a conference call for investors and analysts today to discuss financial results.
About The Timken Company
The Timken Company keeps the world turning, with innovative friction management and power transmission products and services, enabling our customers' machinery to perform more efficiently and reliably. With sales of $5.7 billion in 2008 and operations in 26 countries, Timken is Where You Turn[TM] for better performance.
Certain statements in this news release (including statements regarding the company's forecasts, estimates and expectations) that are not historical in nature are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. In particular, the statements related to expectations regarding the company's future financial performance and timing of the closing of the Needle Roller Bearings transaction, including information under the heading "Outlook", are forward-looking. The company cautions that actual results may differ materially from those projected or implied in forward-looking statements forward-looking statement
A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. due to a variety of important factors, including: the finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of the company's financial statements for the third quarter of 2009; the inability to complete the sale of the Needle Roller Bearings business due to either the failure to satisfy any condition to the closing of the transaction, including receipt of regulatory approval, or the occurrence of any event, change or other circumstance that could give rise to the termination of the purchase agreement; the company's ability to respond to the changes in its end markets that could affect demand for the company's products; unanticipated changes in business relationships with customers or their purchases from the company; changes in the financial health of the company's customers, including any disruptions or bankruptcies in the automotive industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. which may have an impact on the company's revenues, earnings and impairment charges; fluctuations in raw-material and energy costs and their impact on the operation of the company's surcharge An overcharge or additional cost.
A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. mechanisms; the impact of the company's last-in first-out last-in first-out - stack accounting; continued weakness in global economic conditions and financial markets; changes in the expected costs associated with product warranty claims; the inability to obtain the union members' ratification The confirmation or adoption of an act that has already been performed.
A principal can, for example, ratify something that has been done on his or her behalf by another individual who assumed the authority to act in the capacity of an agent. of the tentative agreement covering the company's associates at the Canton Canton, cities, United States
1 City (1990 pop. 13,922), Fulton co., W central Ill., in the corn belt; inc. 1849. It is a trade and industrial center for a coal and farm area.
2 Town (1990 pop. 18,530), Norfolk co. area manufacturing facilities; the impact on operations of general economic conditions, higher or lower raw-material and energy costs, fluctuations in customer demand, and the company's ability to achieve the benefits of its future and ongoing programs and initiatives, including, without limitation, the initiative to reduce its employment levels and other costs, the implementation of its Mobile Industries Segment restructuring program and initiatives and the rationalization of the company's Canton bearing operations. These and additional factors are described in greater detail in the company's Annual Report on Form 10-K Form 10-K
A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information.
See 10-K. for the year ended Dec. 31, 2008, page 44 and in the company's Form 10-Q Form 10-Q
See 10-Q. for the quarter ended June 30, 2009. The company undertakes no obligation to update or revise any forward-looking statement.
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