North Canton, Ohio – The Timken Company (www.timken.com), a global leader in bearings and mechanical power transmission products, reported fourth-quarter 2016 sales of $655 million, down 8.3 per cent from the same period a year ago. The results reflect weakness across most end markets and unfavorable currency, partially offset by the benefit of acquisitions.
In the fourth quarter, Timken posted net income of $24.1 million or $0.31 per diluted share, versus a net loss of $(35.7) million or $(0.44) per basic share for the same period a year ago. The year-over-year improvement in net income was driven by lower pension settlement charges, CDSOA income and lower operating costs, partially offset by lower volume and unfavorable price/mix. The year-ago period also included a gain from the divestiture of the aerospace PMA business and higher discrete income tax benefits.
Excluding special items, adjusted net income was $36.7 million or $0.47 per diluted share. This compares with adjusted net income of $49.0 million or $0.59 per diluted share for the same period in 2015. The decline in adjusted net income reflects lower volume and unfavorable price/mix, partially offset by the benefit of SG&A cost reduction initiatives and lower material costs.
“We performed well in the fourth quarter, giving us a solid finish to the year,” said Richard G. Kyle, Timken president and chief executive officer. “Despite the difficult market environment, we delivered historically strong earnings and cash flow in 2016, which is evidence of the structural improvements we’ve made to our business. We advanced our strategy on all fronts and continued to position the company for profitable growth and shareholder value creation over the long term.”
Among significant accomplishments during the quarter, the company acquired EDT Corp., a manufacturer of polymer housed units and stainless steel ball bearings used widely by the food and beverage industry. The company also returned $38 million in capital to shareholders through the repurchase of roughly 480,000 shares and the payment of its 378th consecutive quarterly dividend. Earlier this month, the Timken Board of Directors approved a new share repurchase authorization for up to 10 million shares, expiring Feb. 28, 2021. This replaces the prior authorization which expired Jan. 31, 2017.
The company expects 2017 revenue to be relatively flat compared with 2016. This includes a negative currency impact of roughly 1.5 per cent, based on Dec. 31, 2016, exchange rates. Within its segments, the company estimates full-year 2017:
– Mobile Industries’ sales to be down approximately 4-5 per cent, driven primarily by market-related declines in the rail sector, continued softness in the agriculture and heavy truck sectors, and unfavorable currency.
– Process Industries’ sales to be up approximately 4-5 per cent, reflecting growth in the industrial aftermarket and wind energy sectors, and the benefit of acquisitions, offset partially by unfavorable currency.
“Sentiment in most of our markets has improved over the last few months, and while we are forecasting the full year to be relatively flat, we are planning for sequential strengthening as we move through 2017,” said Kyle. “We will continue to navigate the environment with discipline and flexibility, staying focused on outgrowing our markets, managing our costs and investing in our business for the long term. As markets improve, we are confident in our ability to achieve new levels of financial performance.”
The Timken Company (www.timken.com) engineers, manufactures and markets bearings, gear drives, belts, chain, couplings, and related products, and offers a spectrum of powertrain rebuild and repair services.