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Timken (TKR) Earnings Beat Estimates in Q4, Increase Y/Y
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The Timken Company (TKR - Free Report) reported adjusted EPS of $1.22 in fourth-quarter 2022, beating the Zacks Consensus Estimate of $1.09 per share. The bottom line increased 56% year over year.
On a reported basis, the company delivered earnings of $1.32 per share in the quarter under review compared with 82 cents per share in the prior-year quarter.
Total revenues in the quarter were $1,082 million, up 7.4% from the year-ago quarter. The upside can be attributed to strong growth across most end-market sectors, driven by industrial distribution and off-highway, as well as the favorable impact of higher pricing, partly offset by unfavorable currency. The top line, however, missed the Zacks Consensus Estimate of $1,096 million.
Costs and Margins
Cost of sales rose 1.5% to $786 million from the prior-year quarter. Gross profit increased 27% year over year to $296 million. The gross margin was 27.4% compared with 23.1% a year ago.
Selling, general and administrative expenses were up 14.3% year over year to $167 million. Adjusted EBITDA increased 37.4% year over year to $186 million. The adjusted EBITDA margin in the quarter was 17.3% compared with 14% in the prior-year quarter.
Timken Company (The) Price, Consensus and EPS Surprise
The Mobile Industries segment’s revenues rose 3.3% year over year to $596 million. The segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $52.9 million compared with the year-ago quarter’s $40 million. The upside was driven by organic growth across most sectors, led by off-highway and rail and positive pricing. These were somewhat offset by unfavorable foreign currency translation, and higher manufacturing and SG&A costs.
The Process Industries segment’s revenues rose 11.1% year over year to $586 million in fourth-quarter 2022. The segment’s adjusted EBITDA was $137.1 million in the fourth quarter of 2022 compared with $104.4 million in the fourth quarter of 2021. The upside was led by organic growth across all sectors led by distribution, heavy industries and general industrial, and the impact of acquisitions (net). A positive pricing mix and higher volumes drove the increase. These headwinds were offset by unfavorable foreign currency translation, and higher manufacturing and SG&A costs.
Financial Position
Timken had cash and cash equivalents of $332 million at the end of 2022, up from $257 million at the end of 2021. Cash flow from operating activities was $242 million in the fourth quarter against $103 million in the prior-year quarter. In the quarter, Timken returned $40.8 million of cash to shareholders through dividends and share repurchases.
Long-term debt as of Dec 31, 2022, was $1.91 billion, up from $1.41billion as of Dec 31, 2021. Net debt to adjusted EBITDA was 1.9 as of Dec 31, 2022, compared with 1.7 as of Dec 31, 2021.
2022 Performance
Timken reported record adjusted EPS of $6.02 in 2022, beating the Zacks Consensus Estimate of $5.90 per share. The bottom line increased 28% year over year. The year-over-year improvement is primarily due to the favorable pricing actions and higher volume, which are partially offset by higher operating costs and interest expenses, a higher tax rate, and the net unfavorable impact of impairment charges and other special items.
On a reported basis, the company delivered earnings of $5.48 per share in 2022 compared with $4.79 per share in 2021.
Total revenues in 2022 were $4.5 billion, in line with the Zacks Consensus Estimate. The top line improved 8.8% on a year-over-year basis. The upside was owing to organic growth across most end market sectors and the impact of higher pricing and acquisitions, partially offset by unfavorable foreign currency translation.
2023 Guidance
Timken expects 2023’s total revenues to be up 6% at the midpoint from the 2022 reported levels. The company anticipates adjusted EPS between $6.50 and $7.10 per share for the year.
Price Performance
In the past year, shares of Timken have gained 27.4% compared to the industry’s growth of 11.2%.
O-I Glass has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for OI’s 2022 earnings is pegged at $2.51 per share. This indicates a 15.7% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has been unchanged in the past 60 days. OI’s shares gained 66.9% in the last year.
Tenaris has an average trailing four-quarter earnings surprise of 20.9%. The Zacks Consensus Estimate for TS’ 2022 earnings is pegged at $4.38 per share. This indicates a 134.2% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has moved north by 2.1% in the past 60 days. Its shares gained 36.9% in the last year.
The Zacks Consensus Estimate for Deere & Company’s fiscal 2023 earnings per share is pegged at $28.01, suggesting an increase of 19.6% from that reported in the last year. The consensus estimate for fiscal 2023 earnings has moved 2.7% upward in the last 60 days. DE has a trailing four-quarter average earnings surprise of 7.1%. Its shares gained 11.7% in the last year.
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Timken (TKR) Earnings Beat Estimates in Q4, Increase Y/Y
The Timken Company (TKR - Free Report) reported adjusted EPS of $1.22 in fourth-quarter 2022, beating the Zacks Consensus Estimate of $1.09 per share. The bottom line increased 56% year over year.
On a reported basis, the company delivered earnings of $1.32 per share in the quarter under review compared with 82 cents per share in the prior-year quarter.
Total revenues in the quarter were $1,082 million, up 7.4% from the year-ago quarter. The upside can be attributed to strong growth across most end-market sectors, driven by industrial distribution and off-highway, as well as the favorable impact of higher pricing, partly offset by unfavorable currency. The top line, however, missed the Zacks Consensus Estimate of $1,096 million.
Costs and Margins
Cost of sales rose 1.5% to $786 million from the prior-year quarter. Gross profit increased 27% year over year to $296 million. The gross margin was 27.4% compared with 23.1% a year ago.
Selling, general and administrative expenses were up 14.3% year over year to $167 million. Adjusted EBITDA increased 37.4% year over year to $186 million. The adjusted EBITDA margin in the quarter was 17.3% compared with 14% in the prior-year quarter.
Timken Company (The) Price, Consensus and EPS Surprise
Timken Company (The) price-consensus-eps-surprise-chart | Timken Company (The) Quote
Segmental Performance
The Mobile Industries segment’s revenues rose 3.3% year over year to $596 million. The segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $52.9 million compared with the year-ago quarter’s $40 million. The upside was driven by organic growth across most sectors, led by off-highway and rail and positive pricing. These were somewhat offset by unfavorable foreign currency translation, and higher manufacturing and SG&A costs.
The Process Industries segment’s revenues rose 11.1% year over year to $586 million in fourth-quarter 2022. The segment’s adjusted EBITDA was $137.1 million in the fourth quarter of 2022 compared with $104.4 million in the fourth quarter of 2021. The upside was led by organic growth across all sectors led by distribution, heavy industries and general industrial, and the impact of acquisitions (net). A positive pricing mix and higher volumes drove the increase. These headwinds were offset by unfavorable foreign currency translation, and higher manufacturing and SG&A costs.
Financial Position
Timken had cash and cash equivalents of $332 million at the end of 2022, up from $257 million at the end of 2021. Cash flow from operating activities was $242 million in the fourth quarter against $103 million in the prior-year quarter. In the quarter, Timken returned $40.8 million of cash to shareholders through dividends and share repurchases.
Long-term debt as of Dec 31, 2022, was $1.91 billion, up from $1.41billion as of Dec 31, 2021. Net debt to adjusted EBITDA was 1.9 as of Dec 31, 2022, compared with 1.7 as of Dec 31, 2021.
2022 Performance
Timken reported record adjusted EPS of $6.02 in 2022, beating the Zacks Consensus Estimate of $5.90 per share. The bottom line increased 28% year over year. The year-over-year improvement is primarily due to the favorable pricing actions and higher volume, which are partially offset by higher operating costs and interest expenses, a higher tax rate, and the net unfavorable impact of impairment charges and other special items.
On a reported basis, the company delivered earnings of $5.48 per share in 2022 compared with $4.79 per share in 2021.
Total revenues in 2022 were $4.5 billion, in line with the Zacks Consensus Estimate. The top line improved 8.8% on a year-over-year basis. The upside was owing to organic growth across most end market sectors and the impact of higher pricing and acquisitions, partially offset by unfavorable foreign currency translation.
2023 Guidance
Timken expects 2023’s total revenues to be up 6% at the midpoint from the 2022 reported levels. The company anticipates adjusted EPS between $6.50 and $7.10 per share for the year.
Price Performance
In the past year, shares of Timken have gained 27.4% compared to the industry’s growth of 11.2%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Timken currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are O-I Glass, Inc (OI - Free Report) Tenaris (TS - Free Report) and Deere & Company (DE - Free Report) . OI and TS flaunt a Zacks Rank #1 (Strong Buy) at present, and DE has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
O-I Glass has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for OI’s 2022 earnings is pegged at $2.51 per share. This indicates a 15.7% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has been unchanged in the past 60 days. OI’s shares gained 66.9% in the last year.
Tenaris has an average trailing four-quarter earnings surprise of 20.9%. The Zacks Consensus Estimate for TS’ 2022 earnings is pegged at $4.38 per share. This indicates a 134.2% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has moved north by 2.1% in the past 60 days. Its shares gained 36.9% in the last year.
The Zacks Consensus Estimate for Deere & Company’s fiscal 2023 earnings per share is pegged at $28.01, suggesting an increase of 19.6% from that reported in the last year. The consensus estimate for fiscal 2023 earnings has moved 2.7% upward in the last 60 days. DE has a trailing four-quarter average earnings surprise of 7.1%. Its shares gained 11.7% in the last year.