Timken (TKR) Closes Nadella Buyout, Boosts Motion Products
The Timken Company TKR announced that it completed the buyout of the Italy-based manufacturer, Nadella Group. The acquisition will allow Timken to broaden its leading industrial motion product portfolio.
The company announced a deal with Nadella on Jan 30, 2023. Timken noted that it would utilize borrowings from committed credit facilities and cash on hand to fund the translation. The financial terms of the transaction, however, were not disclosed.
Nadella has manufacturing facilities in Europe and China, and employs 450 people. It produces linear guides, telescopic rails, actuators and systems, as well as other specialized industrial motion solutions. In 2022, the company generated about €100 million (roughly $109 million) in revenues.
Nadella will contribute to Timken's strategy of expanding and scaling the leading industrial motion product portfolio, which includes linear motion and other engineered products. These products are designed to improve the reliability and efficiency of industrial equipment and machinery.
Timken added linear motion products to its portfolio in 2018 following the acquisition of Rollon Group. Headquartered in Italy, Rollon is a market leader in engineered linear guides, telescopic rails, actuators, and systems for robotics, automation, logistics and other lucrative markets.
Timken expects the Nadella acquisition to be accretive to adjusted earnings in 2023. The company, in February 2023, stated that it expected adjusted EPS between $6.50 and $7.10 for the year. Timken anticipates total revenues in 2023 to be 6% higher at the mid-point than that reported in 2022.
The company delivered a record adjusted EPS of $6.02 in 2022. The bottom line increased 28% year over year. The year-over-year improvement primarily resulted from favorable pricing actions and higher volume, partly offset by higher operating costs and interest expenses, a higher tax rate, and the net unfavorable impacts of impairment charges and other special items.
Total revenues in 2022 were $4.5 billion, up 8.8% on a year-over-year basis. The upside was due to organic growth across most end-market sectors, and the impacts of higher pricing and acquisitions, partly offset by unfavorable foreign currency translation.
Price Performance
In the past year, shares of Timken have gained 33.1% against the industry’s fall of 1.1%.
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Zacks Rank & Stocks to Consider
Timken currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Encore Wire Corporation WIRE, OI Glass, Inc. OI, and Illinois Tool Works Inc. ITW. WIRE flaunts a Zacks Rank #1 (Strong Buy) at present, while OI and ITW have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Encore Wire has an average trailing four-quarter earnings surprise of 146.8%. The Zacks Consensus Estimate for WIRE’s 2023 earnings is pegged at $19.76 per share. The consensus estimate for 2023 earnings has moved north by 1.7% in the past 60 days. Its shares gained 56.3% in the last year.
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 78.3% in the last year.
The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.53, suggesting an increase of 3.9% from that reported in the last year. The consensus estimate for fiscal 2023 earnings rose 1.3% in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 11.9% in the last year.
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