The Timken Company, a world leader in engineered bearings and mechanical power transmission products, reports first-quarter 2018 sales of $883.1 million, up approximately 25% from the same period a year ago. The increase was driven by strong organic growth across most end-market sectors led by industrial distribution and off-highway, as well as the benefit of acquisitions and currency.
In the first quarter, Timken posted net income of $80.2 million or $1.02 per diluted share, versus net income of $38.2 million or $0.48 per diluted share for the same period a year ago. In the current quarter, the company benefitted from higher volume, favorable price/mix and manufacturing performance, and the impact of acquisitions, which were partially offset by higher selling, general and administrative (SG&A) and logistics costs. The current quarter also reflects lower pension-related charges and a lower tax rate.
Excluding special items, adjusted net income in the first quarter of 2018 was $80 million or $1.01 per diluted share, up from $43.7 million or $0.55 per diluted share for the same period in 2017.
"We achieved excellent first-quarter results, reporting strong revenue and earnings growth with expanded margins," says Richard G. Kyle, Timken President and Chief Executive Officer. "Over the last several years, we have grown our portfolio organically and through acquisition, expanded our geographic reach and improved our cost structure. As a result of these strategic actions, we are winning with our customers and outgrowing our markets."
First-Quarter 2018 Segment Results
Mobile Industries reported sales of $488.5 million, up 27.5% compared with the same period a year ago. Acquisitions added revenue of $43.1 million in the quarter, or 11.3%. Excluding acquisitions, revenue was up 16.2%, driven primarily by increased demand in the off-highway, heavy truck and rail sectors, and favorable currency.
Earnings before interest and taxes (EBIT) in the quarter were $51.1 million or 10.5% of sales, compared with EBIT of $32.6 million or 8.5% of sales for the same period a year ago. The increase in EBIT reflects the impact of higher volume and the benefit of acquisitions, partially offset by higher SG&A and logistics costs. The current period also reflects lower restructuring charges.
Excluding special items, adjusted EBIT in the quarter was $51.8 million or 10.6% of sales, compared with $36.6 million or 9.6% of sales in the first quarter last year.
Process Industries sales of $394.6 million increased 23% from the same period a year ago, driven primarily by strong demand across the industrial sectors, including distribution, original equipment and services, as well as favorable currency.
EBIT for the quarter was $81.6 million or 20.7% of sales, compared with EBIT of $44.1 million or 13.7% of sales for the same period a year ago. The increase in EBIT was driven by higher volume and favorable price/mix and manufacturing performance, partially offset by higher SG&A and logistics costs.
2018 Outlook
"We are raising our outlook for the year as a result of the momentum we are seeing in our end markets and our confidence in our ability to execute," says Kyle. "As we continue to advance our strategy and stay focused on creating customer value, Timken is positioned to reach new levels of performance in 2018."
The company now expects 2018 revenue to be up approximately 17% in total versus 2017. This includes expected organic growth of approximately 12% plus the benefit of acquisitions made during 2017 and favorable currency. Within its segments, the company estimates for full-year 2018:
- Mobile Industries sales to be up approximately 17%, driven primarily by organic growth in the off-highway, heavy truck and rail sectors, as well as the benefit of acquisitions and favorable currency.
- Process Industries sales to be up approximately 17%, reflecting broad growth across the industrial sectors, including distribution, original equipment and services, as well as favorable currency.
Timken now anticipates 2018 earnings per diluted share to range from $3.80 to $3.90 for the full year on a GAAP basis. Excluding special items, the company expects 2018 adjusted earnings per diluted share to range from $3.90 to $4.00.
