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Timken reports strong Q3 results


North Canton, Ohio – The Timken Company, a world leader in engineered bearings and mechanical power transmission products, reported third-quarter 2017 sales of $771.4 million, up 17.3 per cent from the same period a year ago. The results reflect higher demand across most end-market sectors led by industrial distribution and off-highway, as well as the benefit of acquisitions and currency.

In the third quarter, Timken posted net income of $53.5 million or $0.68 per diluted share, versus net income of $33.6 million or $0.43 per diluted share for the same period a year ago. The year-over-year increase in net income reflects the impact of higher volume, favorable manufacturing performance, lower impairment and restructuring charges, and the benefit of acquisitions and currency. This was partially offset by higher material, logistics and selling, general and administrative (SG&A) costs.

Excluding special items (detailed in the attached tables), adjusted net income in the third quarter of 2017 was $55.9 million or $0.71 per diluted share, up from $42.1 million or $0.53 per diluted share for the same period in 2016.

“We reported strong revenue and earnings growth in the quarter as we continued to see increased demand for our products and services globally,” said Richard G. Kyle, Timken president and chief executive officer. “We executed well, delivering strong organic growth and expanding operating margins both sequentially and year-on-year. We also strengthened Timken’s strategic position with the completion of the Groeneveld acquisition, our fifth acquisition in the last four quarters. Our organic growth initiatives and recent acquisitions are progressing well and will continue to deliver value for our shareholders.”

Third-Quarter 2017 Segment Results

Mobile Industries reported sales of $422.8 million, up 19.7 per cent compared with the same period a year ago, driven primarily by the benefit of acquisitions, increased demand in the off-highway and heavy truck sectors and favorable currency, partially offset by lower automotive demand.

Earnings before interest and taxes (EBIT) in the quarter were $34.9 million or 8.3 percent of sales, compared with EBIT of $25.9 million or 7.3 percent of sales for the same period a year ago. The increase in EBIT primarily reflects the impact of higher volume, favorable manufacturing performance, the benefit of acquisitions and currency, and lower impairment and restructuring charges, partially offset by unfavorable price/mix and higher material, logistics and SG&A costs.

Excluding special items (detailed in the attached tables), adjusted EBIT in the quarter was $37.6 million or 8.9 percent of sales, compared with $32.4 million or 9.2 percent of sales in the third quarter last year.

Process Industries reported sales of $348.6 million, up 14.6 per cent from the same period a year ago, driven primarily by increased demand in the industrial distribution and heavy industries sectors, increased shipments in wind energy and favorable currency.

EBIT for the quarter was $61.7 million or 17.7 percent of sales, compared with EBIT of $42 million or 13.8 percent of sales for the same period a year ago. The increase in EBIT was driven by higher volume and favorable manufacturing performance, partially offset by higher material, logistics and SG&A costs. (Note: Adjusted EBIT is not detailed here, as there were no special items affecting Process Industries results in the current quarter.)

2017 Outlook

The company now expects 2017 revenue to be up approximately 12 percent in total versus 2016. Within its segments, the company estimates for full-year 2017:

Mobile Industries sales to be up approximately 13 percent, driven by the benefit of acquisitions and currency, and improved demand in the off-highway and heavy truck sectors, partially offset by softer demand in the rail sector.

Process Industries sales to be up approximately 11 percent, reflecting growth across most end-market sectors led by industrial distribution and the benefit of acquisitions and currency.
Timken now anticipates 2017 earnings per diluted share to range from $2.78 to $2.83 for the full year on a GAAP basis, which does not account for the mark-to-market pension remeasurement in the fourth quarter.

Excluding special items (detailed in the attached tables), the company expects 2017 adjusted earnings per diluted share to range from $2.58 to $2.63.

“We continue to advance our strategy, and combined with the strength in our end markets, we are forecasting to finish 2017 with strong year-on-year performance improvement,” said Kyle. “The mid-point of our guidance implies almost a 30 percent increase in fourth-quarter adjusted earnings per share and solid operating margin expansion versus the prior year. Additionally, we expect to start 2018 with a higher backlog, growing markets and a healthy growth pipeline.”

For more information, visit www.timken.com.