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Timken Posts Second Quarter Earnings
07/29/2011 - The Timken Co. reported $121.5 million income from continuing operations on sales of $1.3 billion for the second quarter of 2011.
The Timken Co. reported $121.5 million income from continuing operations on sales of $1.3 billion for the second quarter of 2011.
Second Quarter Results — Income from continuing operations was $121.5 million ($1.22 per diluted share) net of non-controlling interest, reflecting a 49% increase compared with $81.4 million ($0.84 per diluted share) in the year-ago second quarter. Improved demand, mix, surcharges and pricing more than offset higher raw material and logistics costs, as well as increased selling and administrative costs.
Sales of $1.3 billion reflect an increase of 31% over the year-ago second quarter. The company said the increase primarily reflects growing demand in its broad industrial markets, as well as favorable effects from pricing, material surcharges and currency.
"Timken's strategy is working. We're benefitting from an enhanced portfolio, executing well and have positioned the company to capitalize on attractive global markets," said James W. Griffith, Timken President and CEO. "We are on pace to achieve record sales and earnings for the full year."
Second Quarter Highlights — Among recent developments, the company:
· Completed its $200-million acquisition of Philadelphia Gear, a leading provider of aftermarket services for gear-drive systems in a variety of industrial and military marine applications.
· Announced plans to establish a Wind Energy Research and Development Center for advanced bearing systems in large wind turbines.
· Entered into an amended $500-million unsecured senior credit facility that matures in May 2016
· Increased the quarterly dividend by 11 percent to 20 cents per share.
Six Month Results — Earnings from continuing operations increased 113% to $234.2 million ($2.36 per diluted share) net of non-controlling interest as compared with $109.7 million ($1.13 per diluted share) earned in the comparable year-ago period. Earnings benefited from increased demand, higher surcharges and a combination of favorable pricing and mix, which more than offset higher raw material and logistics costs, as well as selling and administrative costs.
Six-month sales of $2.6 billion reflect a 34% increase from the comparable year-ago period. Stronger demand across the company's industrial sectors drove the increase, along with favorable pricing, surcharges and currency effects.
Total debt as of June 30, 2011, was $520.9 million (19.1% of capital). The company had cash of $637.6 million, or $116.7 million in excess of total debt at the end of the second quarter, compared with a net cash position of $363.4 million at the end of 2010.
Outlook — Timken now expects a full-year sales increase of 25 to 30% in 2011 over 2010. The revised outlook reflects the company's second-quarter performance and stronger-than-expected demand in its Steel and Process Industries segments, as well as the benefit expected from the Philadelphia Gear acquisition through the remainder of the year.
The company is raising its 2011 full-year earnings estimate to a range of $4.30 to $4.50 per diluted share from its prior estimate of $3.80 to $4.10 per diluted share. The increase reflects the company’s record first-half results and improved outlook. The company expects cash from operating activities to be approximately $275 million, and a free cash flow use of approximately $10 million after capital expenditures of roughly $210 million and dividends of approximately $75 million. Excluding discretionary pension and VEBA trust contributions of $193 million, net of tax, made in the first half of 2011, free cash flow is expected to be approximately $180 million.
The Timken Co. provides innovative friction management and power transmission products and services. The company’s 20,000 employees operating from locations in 29 countries generated sales of $4.1 billion in 2010.
