Timken (TKR) Earnings Beat Estimates in Q4, Increase Y/Y
The Timken Company TKR reported adjusted earnings per share (EPS) of $1.37 in fourth-quarter 2023, beating the Zacks Consensus Estimate of $1.23 per share. The bottom line grew 2% year over year.
On a reported basis, the company delivered earnings of 83 cents per share in the quarter under review compared with $1.32 in the prior-year quarter.
Total revenues in the quarter were $1.09 billion, up 0.8% from the year-ago quarter. The upside can be attributed to the benefit of acquisitions, higher pricing and favorable foreign currency translation, partly offset by lower volume. The top line beat the Zacks Consensus Estimate of $1.06 million.
Timken Company (The) Price, Consensus and EPS Surprise
Timken Company (The) price-consensus-eps-surprise-chart | Timken Company (The) Quote
Costs and Margins
Cost of sales fell 1.8% to $760 million from the prior-year quarter. Gross profit increased 7.6% year over year to $331 million. The gross margin was 30.3% compared with 28.4% a year ago.
Selling, general and administrative expenses rose 13.3% year over year to $190 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 5.1% year over year to $195 million. The adjusted EBITDA margin in the quarter was 17.9% compared with 17.2% in the prior-year quarter.
Segmental Performances
The Engineered Bearings segment’s revenues declined 2.4% year over year to $724 million. The decrease was mainly due to lower volumes. These were somewhat offset by higher pricing and the benefits of acquisitions. We expected the segment’s sales to be $710 million in the quarter.
The Engineered Bearings segment’s adjusted EBITDA was $132.5 million compared with the year-ago quarter’s $134.2 million. Our prediction for the segment’s adjusted EBITDA was $129.9 million. The impacts of lower volume, higher manufacturing costs, unfavorable foreign currency, and higher impairment and restructuring charges were partially offset by lower material and logistics costs, and a favorable price/mix.
The Industrial Motion segment’s revenues rose 8% year over year to $367 million in fourth-quarter 2023. The upside was led by higher pricing, the benefits of acquisitions and a favorable currency translation, partially offset by lower volume. The reported figure surpassed our estimate of $343 million. The segment’s adjusted EBITDA was $81.6 million in the fourth quarter of 2023 compared with $64.9 million in the fourth quarter of 2022. We projected an adjusted EBITDA of $61 million for the third quarter of 2023.
Financial Position
Timken had cash and cash equivalents of $419 million at the end of 2023, up from $332 million at the end of 2022. Cash flow from operating activities was $545 million in 2023 compared with $464 million in the prior year.
In the fourth quarter, Timken returned $55.7 million in cash to shareholders through dividends and share repurchases.
The long-term debt as of Dec 31, 2023, was $1.79 billion, down from $1.91 billion as of Dec 31, 2022. Net debt to adjusted EBITDA was 2.1 as of Dec 31, 2023.
2023 Performance
Timken reported a record adjusted EPS of $7.05 in 2023, beating the Zacks Consensus Estimate of $6.90 per share. The bottom line increased 9% year over year. On a reported basis, the company delivered earnings of $5.47 per share in 2023 compared with $5.48 per share in 2022.
Total revenues in 2023 were a record $4.77 billion, beating the Zacks Consensus Estimate of $4.73 million. The top line improved 6.1% on a year-over-year basis.
2024 Guidance
Timken expects total revenues to decline 2.5-4.5% from the 2023 reported level. The company anticipates adjusted EPS between $5.80 and $6.20 per share.
Price Performance
In the past year, shares of Timken have gained 0.5% compared with the industry’s growth of 1.9%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Timken currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Cadre Holdings, Inc. CDRE, AZZ Inc. AZZ, and Applied Industrial Technologies AIT. CDRE currently sports a Zacks Rank #1 (Strong Buy), and AZZ and AIT carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.11 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days and suggests year-over-year growth of 16.7%. The company has a trailing four-quarter average earnings surprise of 33%. CDRE shares have gained 49.2% in the past year.
The Zacks Consensus Estimate for AZZ’s fiscal 2024 earnings per share is pegged at $4.19. The consensus estimate for 2024 earnings has moved north by 2% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 37.6%. AZZ shares have rallied 51.8% in the past year.
Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 26.1% in a year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
AZZ Inc. (AZZ) : Free Stock Analysis Report
Timken Company (The) (TKR) : Free Stock Analysis Report
Cadre Holdings, Inc. (CDRE) : Free Stock Analysis Report
