Timken (TKR) Acquires Des-Case to Strengthen Its Portfolio
The Timken Company TKR announced that it has acquired Des-Case Corp., a manufacturer of specialty filtration products for industrial lubricants. The acquisition will strengthen Timken’s existing industrial motion portfolio by providing strong synergy opportunities, such as cross-selling and international expansion.
Founded in 1983, Des-Case operates manufacturing facilities in Tennessee and the Netherlands. The company is well-known for its innovative products and services that boost equipment reliability, profitability and environmental benefits. Timken’s automatic lubrication systems will be enhanced by Des-Case’s filtration solutions.
Des-Case employs around 120 people and targets to achieve around $40 million of revenues for the calendar-year 2023.
Des-Case's extensive product line consists of breathers, filter elements, condition monitoring, lubricant storage and filter systems, which are used throughout the lubricant lifetime. Most of these items are consumables with a highly repeatable purchasing cycle. These are sold through many of the same distributors that hold Timken's bearings and other products.
TKR funded the acquisition with cash on hand and its existing revolving credit facility.
Timken had cash and cash equivalents of $344 million at the end of the second quarter of 2023. Cash flow from operating activities was $144 million in the second quarter. The long-term debt, as of Jun 30, 2023, was $2.05 billion.
The company intends continues to pursue strategic acquisitions to broaden its portfolio and capabilities across diverse markets, with a focus on bearings, adjacent power transmission products and related services. The company continuesIt has plans to grow its highly profitable linear motion product line as it expects strong revenue CAGR for linear motion through 2025.
TKR reported record adjusted earnings per share of $2.01 in second-quarter 2023, missing the Zacks Consensus Estimate of $2.07. The bottom line increased 13% year over year. Total revenues in the quarter were a record $1,272 million, up 10.3% from the year-ago quarter. However, the top line missed the Zacks Consensus Estimate of $1,288 million.
Price Performance
In the past year, Timken’s shares have gained 19.2% compared with the industry’s 29.2% growth.
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Zacks Rank and Key Picks
Timken currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Caterpillar Inc. CAT, Astec Industries, Inc. ASTE and Eaton Corporation plc. ETN. CAT and ASTE sport a Zacks Rank #1 (Strong Buy) each and ETN has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar has an average trailing four-quarter earnings surprise of 18.5%. The Zacks Consensus Estimate for CAT’s 2023 earnings is pegged at $19.81 per share. The consensus estimate for 2023 earnings has moved north by 11.4% in the past 60 days. Its shares have gained 51.6% in the last year.
Astec has an average trailing four-quarter earnings surprise of 20%. The Zacks Consensus Estimate for ASTE’s 2023 earnings is pegged at $2.81 per share. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. ASTE’s shares have gained 22.8% in the last year.
The Zacks Consensus Estimate for Eaton’s 2023 earnings per share is pegged at $8.80. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 3%. Shares of ETN have rallied 68.8% in the last year.
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