Oppenheimer
Industrial Growth
Conference
May 8, 2024
The Timken Company
Forward-Looking Statements Safe Harbor and Non-GAAP Financial Information | 2 |
Certain statements in this presentation (including statements regarding the company's forecasts, beliefs, estimates and expectations) that are not historical in nature are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, the statements related to Timken's plans, outlook, future financial performance, targets, projected sales, cash flows, liquidity, cost reduction measures and expectations regarding the future financial performance of the company are forward-looking.
The Company cautions that actual results may differ materially from those projected or implied in forward-looking statements due to a variety of important factors, including: the Company's ability to respond to the changes in its end markets that could affect demand for the Company's products or services; unanticipated changes in business relationships with customers or their purchases from the Company; changes in the financial health of the Company's customers, which may have an impact on the Company's revenues, earnings and impairment charges; logistical issues associated with port closures or congestion, delays or increased costs; the impact of changes to the Company's accounting methods; political risks associated with government instability; recent world events that have increased the risks posed by international trade disputes, tariffs, sanctions and hostilities; strained geopolitical relations between countries in which we have significant operations; weakness in global or regional general economic conditions and capital markets (as a result of financial stress affecting the banking system or otherwise); the impact of inflation on employee expenses, shipping costs, raw material costs, energy and fuel prices, and other production costs; the Company's ability to satisfy its obligations under its debt agreements and renew or refinance borrowings on favorable terms in a high interest rate environment; fluctuations in currency valuations; changes in the expected costs associated with product warranty claims; the ability to achieve satisfactory operating results in the integration of acquired companies, including realizing any accretion, synergies, and expected cashflow generation within expected timeframes or at all; fluctuations in customer demand; the Company's ability to effectively adjust prices for its products in response to changing dynamics; the impact on the Company's pension obligations and assets due to changes in interest rates, investment performance and other tactics designed to reduce risk; the introduction of new disruptive technologies; unplanned plant shutdowns; the effects of government-imposed restrictions, commercial requirements, and Company goals associated with climate change and emissions or other sustainability initiatives; unanticipated litigation, claims, investigations, remediation, or assessments; changes in the global regulatory landscape; restrictions on the use of, or claims or remediation associated with, per- and polyfluoroalkyl substances; the Company's ability to maintain positive relations with unions and works councils; the Company's ability to compete for skilled labor and to attract, retain and develop management, other key employees, and skilled personnel at all levels of the organization; negative impacts to the Company's operations or financial position as a result of pandemics, epidemics, or other public health concerns and associated governmental measures; and the Company's ability to complete and achieve the benefits of announced plans, programs, initiatives, acquisitions and capital investments. Additional factors are discussed in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2023, quarterly reports on Form 10-Q and current reports on Form 8-K. Except as required by the federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
This presentation includes certain non-GAAP financial measures as defined by the rules and regulations of the Securities and Exchange Commission. Reconciliation of those measures to the most directly comparable GAAP financial measures are provided in the Appendix to this presentation.
Company
Overview
and Strategy
The Timken Company
Company Overview | 4 |
Founded in 1899; NYSE listed since 1922
Leader in Engineered Bearings and Industrial Motion >19K Employees Operating in 45 Countries
>100 Years of Continuous Quarterly Dividends
2023 Key Metrics
$4.8B Revenue | $940M Adjusted EBITDA |
$7.05 Adjusted EPS | 19.7% Adjusted EBITDA Margins |
$357M Free Cash Flow | 1.6% Dividend Yield(1) |
Flagship Brands | |
Sales by Geography(2)
53% Americas
25% Europe, Mid-East,
Africa (EMEA)
22% Asia-Pacific
Business Segment Sales(2) | Channel Overview(2) |
68% | Engineered Bearings | 60% | Original Equipment Customers |
32% | Industrial Motion | 40% | Distributors/End-Users |
- Total dividend yield as of December 31, 2023.
- Percentage of actual sales for 2023.
See appendix for reconciliations of adjusted EBITDA, adjusted EBITDA margin, adjusted EPS and free cash flow to their most directly comparable GAAP financial measures. Free cash flow is defined as net cash provided by operating activities minus capital expenditures.
Attractive and Diverse Market Mix | 5 |
Diverse and fragmented mix of industrial and other end- market sectors
Strong distribution and aftermarket channel position, including services
Complements OE business and provides recurring revenue at higher margins
Growing positions in "newer" sectors with secular growth and different cyclicality profiles
Total 2023 | |||
End-Market/Sector | Construction | ||
Sales Mix | 3% | Heavy Truck (OE) | |
Marine | |||
3% | |||
4% |
Ind. Services
4%
Auto/Truck Aftmkt.
4%
Aerospace
4%
Metals & Mining
5%
Rail 6%
Agriculture/Turf
6%
Automotive (OE)
8%Automation
8%
Industrial Distribution
25%
Other
11%
Renewable Energy
9%
Note: Market/Sector Mix in chart above represents percentage of actual sales for 2023. Certain data contained in the pie chart above has been rounded for presentation purposes.
High-Performing Segments with Diverse Market/Sector Mix | 6 |
Engineered Bearings
Industrial Motion
Construction
Agriculture/Turf 4%
4%
Heavy Truck (OE)
5% | Industrial Distribution |
27% |
Aerospace
5%
Auto/Truck Aftermarket
5%
Metals & Mining
6%
Other
13%
Rail
9%
Automotive (OE) | Renewable Energy |
11% | |
11% | |
Construction
Renewable Energy 3%
5%
Services
11%
Agriculture/Turf
11%
Marine
11%
Other
17%
Automation
23%
Industrial Distribution
19%
$3.3B | 21.0% |
2023 Sales | 2023 Adjusted |
EBITDA Margin |
$1.5B | 21.2% |
2023 Sales | 2023 Adjusted |
EBITDA Margin |
Note: Market/Sector Mix in pie charts above represents percentage of actual sales for 2023. Certain data contained in the pie charts above has been rounded for presentation purposes. See appendix for reconciliation of adjusted EBITDA margin to its most directly comparable GAAP financial measure.
Significantly Evolved Market Mix | 7 |
Tripled annual revenue to over $1.3B
in "newer" markets
29%
total sales
13%
total sales
"Newer" markets include:
Renewable Energy
Automation
Industrial Services
Marine
Food & Beverage
Passenger Rail
Attractive sectors with strong margins, secular growth and/or different cyclicality profiles
2014 | 2023 |
Engineered Bearings: Targeting Attractive Industrial Markets | 8 |
Light Industrial | Medium Industrial | Heavy Industrial | |||
Consumer | Material Handling | Printing & Packaging | Off-Highway | Metals | Oil & Gas |
Medical | Industrial Machinery | Rubber & Plastics | Industrial Machinery | Mining | Power Generation |
Food and Beverage | Automation | Drive Systems | Solar Energy | Cement & Aggregate | Rail |
HVAC | Machine Tool | Wood & Paper | Marine |
Newer Market
OpportunitiesHistoric Timken
Markets
Engineered Bearings: Driving Growth via Product Diversification9
Results
Maintaining leadership position in tapered roller bearings
Driving profitable outgrowth in other bearing product lines
>6% CAGR of Non-Tapered Bearing Product Sales
- Mounted Bearings
- Precision
- Cylindrical
- Spherical
2001 2023
Industrial Motion: Unlocks New Opportunities | 10 |
Industrial Motion significantly expands (>2X) Timken's total addressable market with a broader range of products and technologies Highly technical components leverage Timken's engineering expertise in materials science, power transmission and metallurgy Targets same end users and aftermarket channels with strong profit pools
Creates additional revenue potential with current customers while expanding global customer base
Provides attractive growth opportunities in a large and fragmented space
Linear Motion
Automatic Lubrication Systems Drive Systems & Services
Belts & Chain
Couplings, Clutches & Brakes
Attachments
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Disclaimer
The Timken Co. published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 11:16:22 UTC.