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Timken (TKR) Tops Q1 Earnings Estimates, Raises '24 View

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The Timken Company (TKR - Free Report) reported adjusted earnings per share (EPS) of $1.77 in first-quarter 2024, beating the Zacks Consensus Estimate of $1.50 per share. The bottom line declined 15% year over year from the record EPS of $2.09 in the year-ago quarter, as low volumes offset the impacts of favorable price realization.

Including special items, EPS was $1.46 compared with $1.67 in the first quarter of 2023.

Total revenues were $1.19 billion, down 5.7% from the record revenues of $1.26 billion in the year-ago quarter. The decline was attributed to low demand, particularly in renewable energy in China, and unfavorable foreign currency translation, partially offset by the benefit of acquisitions and favorable pricing. The top line beat the Zacks Consensus Estimate of $1.16 billion.

Timken Company (The) Price, Consensus and EPS Surprise


Timken Company (The) Price, Consensus and EPS Surprise

Timken Company (The) price-consensus-eps-surprise-chart | Timken Company (The) Quote

Costs and Margins

The cost of sales declined 6.3% to $792.7 million from the prior-year quarter. Gross profit was down 5.6% year over year to $397.6 million. The gross margin was 33.4% compared with 30% in the first quarter of 2023.

Selling, general and administrative expenses rose 2% year over year to $190.7 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 7.2% year over year to $246 million. The adjusted EBITDA margin in the quarter was 20.7% compared with 21% in the prior-year quarter.

Segment Performances

The Engineered Bearings segment’s revenues declined 10.9% year over year to $802.5 million. The decrease was mainly due to weak demand and unfavorable foreign currency translation, offset by higher pricing. Weakness was noted in renewable energy and off-highway end markets while demand for rail was notably strong. We expected the segment’s sales to be $837 million .

The Engineered Bearings segment’s adjusted EBITDA was $181.4 million compared with the year-ago quarter’s $203.8 million. The year-over-year drop reflected the impacts of lower volume, partially offset by a favorable price/mix and improved operating cost performance. Our prediction for the segment’s adjusted EBITDA was $177 million.

The Industrial Motion segment’s revenues rose 7% year over year to $389 million. The upside was led by higher pricing and the benefits of acquisitions, partially offset by lower volume. The reported figure surpassed our estimate of $332 million.

The segment’s adjusted EBITDA was $82.1 million, indicating a 7% increase year over year aided by acquisitions, improved operating cost performance and favorable price/mix, partially offset by the impact of lower volume. We projected an adjusted EBITDA of $49 million.

Cash Flow & Balance Sheet Updates

Timken had cash and cash equivalents of $422 million at the end of the first quarter of 2024, up from $419 million at the end of 2023. Cash flow from operating activities was $49 million compared with $79 million in the prior-year quarter.

In the Jan-March period, Timken returned $24.5 million in cash to shareholders through dividends.

The long-term debt as of Mar 31, 2024, was around $1.8 billion, flat compared with the figure as of Dec 31, 2022. Net debt to adjusted EBITDA was 2.1 as of Mar 31, 2024.

2024 Guidance

Timken expects total revenues to decline 2-4% (earlier stated expectation was 2.5-4.5%) from the 2023 reported level. The company now anticipates adjusted EPS between $6.00 and $6.30 , higher than the prior stated range of $5.80 to $6.20.

The raised guidance reflects the first-quarter performance and expected improvement across multiple end-market sectors through the remaining part of the year. This will be offset partially by lower expectations for wind energy and unfavorable foreign currency translation. An improved mix and strong operational execution are expected to aid margin expansion and earnings growth.

Price Performance & Zacks Rank

In the past year, shares of Timken have gained 16.3% compared with the industry’s 33% growth.


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Timken currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

How Did TKR’s Industry Peers Fare in Q1?

TriMas Corporation (TRS - Free Report) reported a first-quarter 2024 adjusted EPS of 37 cents, surpassing the Zacks Consensus Estimate of 28 cents. The bottom-line figure indicates a 5.7% increase, which was driven by improved performances in the Aerospace and Packaging segments, gains from recent acquisitions and operational improvements that offset the impact of higher interest and tax expenses in the quarter.

TriMas witnessed a 5.4% year-over-year increase in revenues to $227 million. The top line beat the Zacks Consensus Estimate of $217 million. The increase was attributed to organic growth in aerospace and defense, some packaging product lines and contributions from acquisitions. However, weak market demand for products used in certain industrial, and oil and gas applications negated some of these tailwinds.

Kaiser Aluminum (KALU - Free Report) reported an adjusted EPS of $1.02, which beat the Zacks Consensus Estimate of 58 cents by a solid margin of 76%. The bottom-line figure increased 3% from the year-ago quarter.

Net sales for the first quarter of 2024 declined 9% year over year to $738 million but beat the consensus estimate of $687 million. Net sales for Kaiser Aluminum’s aerospace/high-strength applications were up 12% on higher pricing and shipments. This was offset by an 11% decline in sales for packaging applications due to lower shipments for coated food products.

ESAB Corporation (ESAB - Free Report) reported an adjusted EPS of $1.20 in first-quarter 2024, surpassing the Zacks Consensus Estimate of $1.11. The bottom line rose 15% year over year reflecting the gains from its ESAB Business Excellence, its unique business-management system to drive growth and margin expansion.

ESAB reported record first-quarter sales of $690 million, which beat the consensus estimate of $667 million. Sales were up 1% year over year on a reported basis.

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