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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Timken Co | NYSE:TKR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.32 | 0.36% | 89.49 | 90.67 | 88.88 | 90.48 | 408,980 | 01:00:00 |
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Ohio
|
|
34-0577130
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
|
|
4500 Mount Pleasant Street NW
|
|
|
|
North Canton
|
Ohio
|
|
44720-5450
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Title of each class
|
|
Trading Symbol
|
|
Name of each exchange on which registered
|
|
|
Common Shares, without par value
|
|
TKR
|
|
The New York Stock Exchange
|
|
Large accelerated filer
|
|
☒
|
|
Accelerated filer
|
☐
|
|
|
|
|
|
|
Non-accelerated filer
|
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
☐
|
|
Class
|
|
Outstanding at March 31, 2020
|
|
|
Common Shares, without par value
|
|
75,066,149 shares
|
|
|
|
|
PAGE
|
I.
|
|
|
|
|
Item 1.
|
||
|
Item 2.
|
||
|
Item 3.
|
||
|
Item 4.
|
||
II.
|
|
|
|
|
Item 1.
|
||
|
Item1A.
|
||
|
Item 2.
|
||
|
Item 6.
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
(Dollars in millions, except per share data)
|
|
|
|
||||
Net sales
|
$
|
923.4
|
|
|
$
|
979.7
|
|
Cost of products sold
|
644.5
|
|
|
677.1
|
|
||
Gross Profit
|
278.9
|
|
|
302.6
|
|
||
Selling, general and administrative expenses
|
153.6
|
|
|
152.7
|
|
||
Impairment and restructuring charges
|
3.6
|
|
|
—
|
|
||
Operating Income
|
121.7
|
|
|
149.9
|
|
||
Interest expense
|
(17.1
|
)
|
|
(18.0
|
)
|
||
Interest income
|
1.5
|
|
|
1.3
|
|
||
Non-service pension and other postretirement income
|
3.4
|
|
|
0.1
|
|
||
Other income, net
|
4.1
|
|
|
3.3
|
|
||
Income Before Income Taxes
|
113.6
|
|
|
136.6
|
|
||
Provision for income taxes
|
29.6
|
|
|
41.3
|
|
||
Net Income
|
84.0
|
|
|
95.3
|
|
||
Less: Net income attributable to noncontrolling interest
|
3.3
|
|
|
3.4
|
|
||
Net Income Attributable to The Timken Company
|
$
|
80.7
|
|
|
$
|
91.9
|
|
|
|
|
|
||||
Net Income per Common Share Attributable to The Timken Company
Common Shareholders
|
|
|
|
||||
Basic earnings per share
|
$
|
1.07
|
|
|
$
|
1.21
|
|
|
|
|
|
||||
Diluted earnings per share
|
$
|
1.06
|
|
|
$
|
1.19
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
(Dollars in millions)
|
|
|
|
||||
Net Income
|
$
|
84.0
|
|
|
$
|
95.3
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
(78.8
|
)
|
|
(4.2
|
)
|
||
Pension and postretirement liability adjustments
|
(1.3
|
)
|
|
(0.1
|
)
|
||
Change in fair value of marketable securities
|
(0.4
|
)
|
|
—
|
|
||
Change in fair value of derivative financial instruments
|
4.2
|
|
|
(0.6
|
)
|
||
Other comprehensive loss, net of tax
|
(76.3
|
)
|
|
(4.9
|
)
|
||
Comprehensive Income, net of tax
|
7.7
|
|
|
90.4
|
|
||
Less: comprehensive (loss) income attributable to noncontrolling interest
|
(4.2
|
)
|
|
4.3
|
|
||
Comprehensive Income Attributable to The Timken Company
|
$
|
11.9
|
|
|
$
|
86.1
|
|
|
(Unaudited)
|
|
|
||||
|
March 31,
2020 |
|
December 31,
2019 |
||||
(Dollars in millions)
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
387.5
|
|
|
$
|
209.5
|
|
Restricted cash
|
6.5
|
|
|
6.7
|
|
||
Accounts receivable, less allowances (2020 – $18.2 million; 2019 – $18.1 million)
|
577.7
|
|
|
545.1
|
|
||
Unbilled receivables
|
137.4
|
|
|
129.2
|
|
||
Inventories, net
|
819.7
|
|
|
842.0
|
|
||
Deferred charges and prepaid expenses
|
35.7
|
|
|
36.7
|
|
||
Other current assets
|
127.7
|
|
|
105.4
|
|
||
Total Current Assets
|
2,092.2
|
|
|
1,874.6
|
|
||
Property, Plant and Equipment, net
|
961.6
|
|
|
989.2
|
|
||
Other Assets
|
|
|
|
||||
Goodwill
|
987.9
|
|
|
993.7
|
|
||
Other intangible assets
|
735.3
|
|
|
758.5
|
|
||
Operating lease assets
|
112.8
|
|
|
114.1
|
|
||
Non-current pension assets
|
7.1
|
|
|
3.4
|
|
||
Non-current other postretirement benefit assets
|
—
|
|
|
36.6
|
|
||
Deferred income taxes
|
67.4
|
|
|
71.8
|
|
||
Other non-current assets
|
15.7
|
|
|
18.0
|
|
||
Total Other Assets
|
1,926.2
|
|
|
1,996.1
|
|
||
Total Assets
|
$
|
4,980.0
|
|
|
$
|
4,859.9
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Short-term debt
|
$
|
109.0
|
|
|
$
|
17.3
|
|
Current portion of long-term debt
|
64.1
|
|
|
64.7
|
|
||
Short-term operating lease liabilities
|
28.6
|
|
|
28.3
|
|
||
Accounts payable, trade
|
296.0
|
|
|
301.7
|
|
||
Salaries, wages and benefits
|
88.3
|
|
|
134.5
|
|
||
Income taxes payable
|
15.8
|
|
|
17.8
|
|
||
Other current liabilities
|
168.0
|
|
|
172.3
|
|
||
Total Current Liabilities
|
769.8
|
|
|
736.6
|
|
||
Non-Current Liabilities
|
|
|
|
||||
Long-term debt
|
1,785.8
|
|
|
1,648.1
|
|
||
Accrued pension benefits
|
164.5
|
|
|
165.1
|
|
||
Accrued postretirement benefits
|
44.8
|
|
|
31.8
|
|
||
Long-term operating lease liabilities
|
70.8
|
|
|
71.3
|
|
||
Deferred income taxes
|
158.7
|
|
|
168.2
|
|
||
Other non-current liabilities
|
85.3
|
|
|
84.0
|
|
||
Total Non-Current Liabilities
|
2,309.9
|
|
|
2,168.5
|
|
||
Shareholders’ Equity
|
|
|
|
||||
Class I and II Serial Preferred Stock, without par value:
|
|
|
|
||||
Authorized – 10,000,000 shares each class, none issued
|
—
|
|
|
—
|
|
||
Common shares, without par value:
|
|
|
|
||||
Authorized – 200,000,000 shares
|
|
|
|
||||
Issued (including shares in treasury) (2020 – 98,375,135 shares;
2019 – 98,375,135 shares) |
|
|
|
||||
Stated capital
|
53.1
|
|
|
53.1
|
|
||
Other paid-in capital
|
920.1
|
|
|
937.6
|
|
||
Earnings invested in the business
|
1,964.8
|
|
|
1,907.4
|
|
||
Accumulated other comprehensive loss
|
(118.9
|
)
|
|
(50.1
|
)
|
||
Treasury shares at cost (2020 – 23,308,986 shares; 2019 – 22,836,180 shares)
|
(1,001.7
|
)
|
|
(979.8
|
)
|
||
Total Shareholders’ Equity
|
1,817.4
|
|
|
1,868.2
|
|
||
Noncontrolling Interest
|
82.9
|
|
|
86.6
|
|
||
Total Equity
|
1,900.3
|
|
|
1,954.8
|
|
||
Total Liabilities and Equity
|
$
|
4,980.0
|
|
|
$
|
4,859.9
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
(Dollars in millions)
|
|
|
|
||||
CASH PROVIDED (USED)
|
|
|
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
84.0
|
|
|
$
|
95.3
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
42.3
|
|
|
39.5
|
|
||
Loss (gain) on sale of assets
|
1.2
|
|
|
(1.8
|
)
|
||
Deferred income tax (benefit) provision
|
(5.1
|
)
|
|
0.4
|
|
||
Stock-based compensation expense
|
5.6
|
|
|
7.8
|
|
||
Pension and other postretirement (income) expense
|
(0.3
|
)
|
|
2.9
|
|
||
Pension and other postretirement benefit contributions and payments
|
(5.5
|
)
|
|
(4.9
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(47.6
|
)
|
|
(65.0
|
)
|
||
Unbilled receivables
|
(8.3
|
)
|
|
(6.6
|
)
|
||
Inventories
|
0.3
|
|
|
(4.1
|
)
|
||
Accounts payable, trade
|
—
|
|
|
20.2
|
|
||
Other accrued expenses
|
(34.3
|
)
|
|
(58.0
|
)
|
||
Income taxes
|
12.5
|
|
|
24.7
|
|
||
Other, net
|
11.4
|
|
|
1.9
|
|
||
Net Cash Provided by Operating Activities
|
56.2
|
|
|
52.3
|
|
||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(31.8
|
)
|
|
(16.2
|
)
|
||
Acquisitions, net of cash received
|
—
|
|
|
(2.9
|
)
|
||
Proceeds from disposal of property, plant and equipment
|
—
|
|
|
2.1
|
|
||
Investments in short-term marketable securities, net
|
0.2
|
|
|
(2.6
|
)
|
||
Net Cash Used in Investing Activities
|
(31.6
|
)
|
|
(19.6
|
)
|
||
Financing Activities
|
|
|
|
||||
Cash dividends paid to shareholders
|
(22.9
|
)
|
|
(21.3
|
)
|
||
Purchase of treasury shares
|
(42.3
|
)
|
|
(8.3
|
)
|
||
Proceeds from exercise of stock options
|
7.5
|
|
|
1.0
|
|
||
Payments related to tax withholding for stock-based compensation
|
(10.2
|
)
|
|
(6.4
|
)
|
||
Accounts receivable facility borrowings
|
10.0
|
|
|
25.0
|
|
||
Accounts receivable facility payments
|
(10.0
|
)
|
|
—
|
|
||
Proceeds from long-term debt
|
200.0
|
|
|
207.0
|
|
||
Payments on long-term debt
|
(37.9
|
)
|
|
(116.8
|
)
|
||
Short-term debt activity, net
|
72.3
|
|
|
(6.8
|
)
|
||
Net Cash Provided by Financing Activities
|
166.5
|
|
|
73.4
|
|
||
Effect of exchange rate changes on cash
|
(13.3
|
)
|
|
0.9
|
|
||
Increase in Cash, Cash Equivalents and Restricted Cash
|
177.8
|
|
|
107.0
|
|
||
Cash, cash equivalents and restricted cash at beginning of year
|
216.2
|
|
|
133.1
|
|
||
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
394.0
|
|
|
$
|
240.1
|
|
|
Initial Purchase
Price Allocation |
Adjustments
|
Purchase
Price Allocation
|
||||||
Assets:
|
|
|
|
||||||
Accounts receivable, net
|
$
|
26.3
|
|
$
|
(0.1
|
)
|
$
|
26.2
|
|
Inventories, net
|
62.9
|
|
0.2
|
|
63.1
|
|
|||
Other current assets
|
4.9
|
|
1.0
|
|
5.9
|
|
|||
Property, plant and equipment, net
|
57.4
|
|
—
|
|
57.4
|
|
|||
Operating lease assets
|
4.7
|
|
—
|
|
4.7
|
|
|||
Goodwill
|
44.2
|
|
6.7
|
|
50.9
|
|
|||
Other intangible assets
|
84.4
|
|
—
|
|
84.4
|
|
|||
Other non-current assets
|
0.7
|
|
—
|
|
0.7
|
|
|||
Total assets acquired
|
$
|
285.5
|
|
$
|
7.8
|
|
$
|
293.3
|
|
Liabilities:
|
|
|
|
||||||
Accounts payable, trade
|
$
|
10.8
|
|
$
|
(0.2
|
)
|
$
|
10.6
|
|
Salaries, wages and benefits
|
6.8
|
|
—
|
|
6.8
|
|
|||
Income taxes payable
|
2.1
|
|
—
|
|
2.1
|
|
|||
Other current liabilities
|
6.7
|
|
7.4
|
|
14.1
|
|
|||
Short-term debt
|
0.8
|
|
—
|
|
0.8
|
|
|||
Long-term debt
|
17.2
|
|
—
|
|
17.2
|
|
|||
Accrued pension benefits
|
0.5
|
|
—
|
|
0.5
|
|
|||
Accrued postretirement benefits
|
0.1
|
|
—
|
|
0.1
|
|
|||
Long-term operating lease liabilities
|
4.1
|
|
—
|
|
4.1
|
|
|||
Deferred income taxes
|
5.1
|
|
(0.2
|
)
|
4.9
|
|
|||
Other non-current liabilities
|
1.1
|
|
0.8
|
|
1.9
|
|
|||
Total liabilities assumed
|
$
|
55.3
|
|
$
|
7.8
|
|
$
|
63.1
|
|
Noncontrolling interest acquired
|
1.8
|
|
—
|
|
1.8
|
|
|||
Net assets acquired
|
$
|
228.4
|
|
$
|
—
|
|
$
|
228.4
|
|
|
Three Months Ended
|
Three Months Ended
|
||||||||||||||||
|
March 31, 2020
|
March 31, 2019
|
||||||||||||||||
|
Mobile
|
Process
|
Total
|
Mobile
|
Process
|
Total
|
||||||||||||
United States
|
$
|
238.2
|
|
$
|
192.6
|
|
$
|
430.8
|
|
$
|
273.7
|
|
$
|
209.7
|
|
$
|
483.4
|
|
Americas excluding United States
|
48.8
|
|
35.0
|
|
83.8
|
|
48.5
|
|
43.6
|
|
92.1
|
|
||||||
Europe / Middle East / Africa
|
108.7
|
|
115.6
|
|
224.3
|
|
101.7
|
|
125.0
|
|
226.7
|
|
||||||
Asia-Pacific
|
71.0
|
|
113.5
|
|
184.5
|
|
76.1
|
|
101.4
|
|
177.5
|
|
||||||
Net sales
|
$
|
466.7
|
|
$
|
456.7
|
|
$
|
923.4
|
|
$
|
500.0
|
|
$
|
479.7
|
|
$
|
979.7
|
|
|
Three Months Ended
|
Three Months Ended
|
Revenue by sales channel
|
March 31, 2020
|
March 31, 2019
|
Original equipment manufacturers
|
59%
|
57%
|
Distribution/end users
|
41%
|
43%
|
|
March 31, 2020
|
||
Beginning balance, January 1
|
$
|
129.2
|
|
Additional unbilled revenue recognized
|
110.7
|
|
|
Less: amounts billed to customers
|
(102.5
|
)
|
|
Ending balance
|
$
|
137.4
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net sales:
|
|
|
|
||||
Mobile Industries
|
$
|
466.7
|
|
|
$
|
500.0
|
|
Process Industries
|
456.7
|
|
|
479.7
|
|
||
Net sales
|
$
|
923.4
|
|
|
$
|
979.7
|
|
Segment EBITDA:
|
|
|
|
||||
Mobile Industries
|
$
|
75.1
|
|
|
$
|
79.3
|
|
Process Industries
|
107.5
|
|
|
127.6
|
|
||
Total EBITDA, for reportable segments
|
$
|
182.6
|
|
|
$
|
206.9
|
|
Corporate EBITDA
|
(11.1
|
)
|
|
(14.1
|
)
|
||
Depreciation and amortization
|
(42.3
|
)
|
|
(39.5
|
)
|
||
Interest expense
|
(17.1
|
)
|
|
(18.0
|
)
|
||
Interest income
|
1.5
|
|
|
1.3
|
|
||
Income before income taxes
|
$
|
113.6
|
|
|
$
|
136.6
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Provision for income taxes
|
$
|
29.6
|
|
|
$
|
41.3
|
|
Effective tax rate
|
26.1
|
%
|
|
30.2
|
%
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Numerator:
|
|
|
|
||||
Net income attributable to The Timken Company
|
$
|
80.7
|
|
|
$
|
91.9
|
|
Less: undistributed earnings allocated to nonvested
stock |
—
|
|
|
—
|
|
||
Net income available to common shareholders for basic
and diluted earnings per share
|
$
|
80.7
|
|
|
$
|
91.9
|
|
Denominator:
|
|
|
|
||||
Weighted average number of shares outstanding - basic
|
75,461,254
|
|
|
75,986,285
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Stock options and awards - based on the treasury stock
method |
847,302
|
|
|
1,026,288
|
|
||
Weighted average number of shares outstanding
assuming dilution of stock options and awards |
76,308,556
|
|
|
77,012,573
|
|
||
Basic earnings per share
|
$
|
1.07
|
|
|
$
|
1.21
|
|
Diluted earnings per share
|
$
|
1.06
|
|
|
$
|
1.19
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Manufacturing supplies
|
$
|
34.2
|
|
|
$
|
34.2
|
|
Raw materials
|
101.2
|
|
|
100.0
|
|
||
Work in process
|
316.9
|
|
|
308.9
|
|
||
Finished products
|
411.1
|
|
|
439.0
|
|
||
Subtotal
|
863.4
|
|
|
882.1
|
|
||
Allowance for obsolete and surplus inventory
|
(43.7
|
)
|
|
(40.1
|
)
|
||
Total Inventories, net
|
$
|
819.7
|
|
|
$
|
842.0
|
|
|
Mobile
Industries
|
Process
Industries
|
Total
|
||||||
Beginning balance
|
$
|
361.3
|
|
$
|
632.4
|
|
$
|
993.7
|
|
Acquisitions
|
4.5
|
|
2.2
|
|
6.7
|
|
|||
Foreign currency translation adjustments and other changes
|
(6.3
|
)
|
(6.2
|
)
|
(12.5
|
)
|
|||
Ending balance
|
$
|
359.5
|
|
$
|
628.4
|
|
$
|
987.9
|
|
|
Balance at March 31, 2020
|
Balance at December 31, 2019
|
||||||||||||||||
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
||||||||||||
Intangible assets
subject to amortization:
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
504.0
|
|
$
|
(135.3
|
)
|
$
|
368.7
|
|
$
|
510.9
|
|
$
|
(128.8
|
)
|
$
|
382.1
|
|
Technology and know-how
|
261.9
|
|
(58.0
|
)
|
203.9
|
|
265.1
|
|
(54.7
|
)
|
210.4
|
|
||||||
Trade names
|
12.5
|
|
(6.2
|
)
|
6.3
|
|
12.7
|
|
(6.1
|
)
|
6.6
|
|
||||||
Capitalized software
|
271.1
|
|
(247.9
|
)
|
23.2
|
|
270.3
|
|
(245.8
|
)
|
24.5
|
|
||||||
Other
|
13.6
|
|
(9.2
|
)
|
4.4
|
|
13.8
|
|
(9.1
|
)
|
4.7
|
|
||||||
|
$
|
1,063.1
|
|
$
|
(456.6
|
)
|
$
|
606.5
|
|
$
|
1,072.8
|
|
$
|
(444.5
|
)
|
$
|
628.3
|
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
||||||||||||
Trade names
|
$
|
120.1
|
|
|
$
|
120.1
|
|
$
|
121.5
|
|
|
$
|
121.5
|
|
||||
FAA air agency certificates
|
8.7
|
|
|
8.7
|
|
8.7
|
|
|
8.7
|
|
||||||||
|
$
|
128.8
|
|
|
|
$
|
128.8
|
|
$
|
130.2
|
|
|
|
$
|
130.2
|
|
||
Total intangible assets
|
$
|
1,191.9
|
|
$
|
(456.6
|
)
|
$
|
735.3
|
|
$
|
1,203.0
|
|
$
|
(444.5
|
)
|
$
|
758.5
|
|
|
March 31,
2020 |
December 31,
2019 |
||||
Variable-rate Accounts Receivable Facility with an interest rate of 2.52% at March 31, 2020 and 2.77% at December 31, 2019
|
$
|
21.9
|
|
$
|
1.8
|
|
Borrowings under lines of credit for certain of the Company’s foreign subsidiaries with various banks with interest rates ranging from 0.30% to 1.75% at March 31, 2020 and 0.27% to 1.75% at December 31, 2019
|
87.1
|
|
15.5
|
|
||
Short-term debt
|
$
|
109.0
|
|
$
|
17.3
|
|
|
March 31,
2020 |
December 31,
2019 |
||||
Variable-rate Senior Credit Facility with an average interest rate on U.S. Dollar of 2.72% and Euro of 1.00% at March 31, 2020 and 2.85% and Euro of 1.00% at December 31, 2019
|
$
|
296.4
|
|
$
|
132.7
|
|
Variable-rate Euro Term Loan(1), maturing on September 18, 2020, with an interest rate of 1.13% at March 31, 2020 and December 31, 2019
|
53.5
|
|
54.4
|
|
||
Variable-rate Accounts Receivable Facility with an interest rate of 2.52% at March 31, 2020 and 2.77% at December 31, 2019
|
78.1
|
|
98.2
|
|
||
Variable-rate Term Loan(1), maturing on September 11, 2023, with an interest rate of 2.11% at March 31, 2020 and 2.92% at December 31, 2019
|
336.3
|
|
338.5
|
|
||
Fixed-rate Senior Unsecured Notes(1), maturing on September 1, 2024, with an interest rate of 3.875%
|
348.6
|
|
348.5
|
|
||
Fixed-rate Euro Senior Unsecured Notes(1), maturing on September 7, 2027, with an interest rate of 2.02%
|
165.0
|
|
167.7
|
|
||
Fixed-rate Senior Unsecured Notes(1), maturing on December 15, 2028, with an interest rate of 4.50%
|
396.2
|
|
396.1
|
|
||
Fixed-rate Medium-Term Notes, Series A(1), maturing at various dates through May 2028, with interest rates ranging from 6.74% to 7.76%
|
154.6
|
|
154.6
|
|
||
Fixed-rate Bank Loan, maturing on June 30, 2033, with an interest rate of 2.15%
|
17.7
|
|
18.0
|
|
||
Other
|
3.5
|
|
4.1
|
|
||
|
1,849.9
|
|
1,712.8
|
|
||
Less: Current maturities
|
64.1
|
|
64.7
|
|
||
Long-term debt
|
$
|
1,785.8
|
|
$
|
1,648.1
|
|
|
|
The Timken Company Shareholders
|
|
||||||||||||||||||
|
Total
|
Stated
Capital
|
Other
Paid-In
Capital
|
Earnings
Invested
in the
Business
|
Accumulated
Other
Comprehensive
(Loss)
|
Treasury
Stock
|
Non
controlling
Interest
|
||||||||||||||
Balance at December 31, 2019
|
$
|
1,954.8
|
|
$
|
53.1
|
|
$
|
937.6
|
|
$
|
1,907.4
|
|
$
|
(50.1
|
)
|
$
|
(979.8
|
)
|
$
|
86.6
|
|
Cumulative effect of ASU 2016-13
(net of income tax benefit of $0.2 million) |
(0.4
|
)
|
|
|
(0.4
|
)
|
|
|
|
||||||||||||
Net income
|
84.0
|
|
|
|
80.7
|
|
|
|
3.3
|
|
|||||||||||
Foreign currency translation adjustment
|
(78.8
|
)
|
|
|
|
(71.3
|
)
|
|
(7.5
|
)
|
|||||||||||
Pension and other postretirement liability
adjustments (net of income tax benefit of $0.5 million) |
(1.3
|
)
|
|
|
|
(1.3
|
)
|
|
|
||||||||||||
Unrealized loss on marketable securities
|
(0.4
|
)
|
|
|
|
(0.4
|
)
|
|
|
||||||||||||
Change in fair value of derivative financial
instruments, net of reclassifications |
4.2
|
|
|
|
|
4.2
|
|
|
|
||||||||||||
Change in ownership of noncontrolling
interest
|
0.5
|
|
|
|
|
|
|
0.5
|
|
||||||||||||
Dividends – $0.28 per share
|
(22.9
|
)
|
|
|
(22.9
|
)
|
|
|
|
||||||||||||
Stock-based compensation expense
|
5.6
|
|
|
5.6
|
|
|
|
|
|
||||||||||||
Stock purchased at fair market value
|
(42.3
|
)
|
|
|
|
|
(42.3
|
)
|
|
||||||||||||
Stock option exercise activity
|
7.5
|
|
|
(0.9
|
)
|
|
|
8.4
|
|
|
|||||||||||
Restricted share activity
|
—
|
|
|
(22.2
|
)
|
|
|
22.2
|
|
|
|||||||||||
Payments related to tax withholding for
stock-based compensation |
(10.2
|
)
|
|
|
|
|
(10.2
|
)
|
|
||||||||||||
Balance at March 31, 2020
|
$
|
1,900.3
|
|
$
|
53.1
|
|
$
|
920.1
|
|
$
|
1,964.8
|
|
$
|
(118.9
|
)
|
$
|
(1,001.7
|
)
|
$
|
82.9
|
|
|
|
The Timken Company Shareholders
|
|
||||||||||||||||||
|
Total
|
Stated
Capital
|
Other
Paid-In
Capital
|
Earnings
Invested
in the
Business
|
Accumulated
Other
Comprehensive
(Loss)
|
Treasury
Stock
|
Non
controlling
Interest
|
||||||||||||||
Balance at December 31, 2018
|
$
|
1,642.7
|
|
$
|
53.1
|
|
$
|
951.9
|
|
$
|
1,630.2
|
|
$
|
(95.3
|
)
|
$
|
(960.3
|
)
|
$
|
63.1
|
|
Net income
|
95.3
|
|
|
|
91.9
|
|
|
|
3.4
|
|
|||||||||||
Foreign currency translation adjustment
|
(4.2
|
)
|
|
|
|
(5.1
|
)
|
|
0.9
|
|
|||||||||||
Pension and postretirement liability
adjustments |
(0.1
|
)
|
|
|
|
(0.1
|
)
|
|
|
||||||||||||
Change in fair value of derivative financial
instruments, net of reclassifications |
(0.6
|
)
|
|
|
|
(0.6
|
)
|
|
|
||||||||||||
Dividends – $0.28 per share
|
(21.3
|
)
|
|
|
(21.3
|
)
|
|
|
|
||||||||||||
Stock-based compensation
|
7.8
|
|
|
7.8
|
|
|
|
|
|
||||||||||||
Stock purchased at fair market value
|
(8.3
|
)
|
|
|
|
|
(8.3
|
)
|
|
||||||||||||
Stock option exercise activity
|
1.0
|
|
|
(0.6
|
)
|
|
|
1.6
|
|
|
|||||||||||
Restricted share activity
|
—
|
|
|
(20.9
|
)
|
|
|
20.9
|
|
|
|||||||||||
Payments related to tax withholding for
stock-based compensation |
(6.4
|
)
|
|
|
|
|
|
(6.4
|
)
|
|
|||||||||||
Balance at March 31, 2019
|
$
|
1,705.9
|
|
$
|
53.1
|
|
$
|
938.2
|
|
$
|
1,700.8
|
|
$
|
(101.1
|
)
|
$
|
(952.5
|
)
|
$
|
67.4
|
|
|
Mobile Industries
|
Process Industries
|
Corporate
|
Total
|
||||||||
Impairment charges
|
$
|
—
|
|
$
|
0.1
|
|
$
|
—
|
|
$
|
0.1
|
|
Severance and related benefit costs
|
0.1
|
|
2.5
|
|
0.1
|
|
2.7
|
|
||||
Exit costs
|
0.6
|
|
0.2
|
|
—
|
|
0.8
|
|
||||
Total
|
$
|
0.7
|
|
$
|
2.8
|
|
$
|
0.1
|
|
$
|
3.6
|
|
|
March 31,
2020 |
||
Beginning balance, January 1
|
$
|
2.7
|
|
Expense
|
3.5
|
|
|
Payments
|
(1.7
|
)
|
|
Ending balance
|
$
|
4.5
|
|
|
U.S. Plans
|
International Plans
|
Total
|
|||||||||||||||
|
Three Months Ended
March 31, |
Three Months Ended
March 31, |
Three Months Ended
March 31, |
|||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Components of net periodic
benefit cost:
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
2.7
|
|
$
|
2.6
|
|
$
|
0.4
|
|
$
|
0.4
|
|
$
|
3.1
|
|
$
|
3.0
|
|
Interest cost
|
5.2
|
|
6.0
|
|
1.5
|
|
1.9
|
|
6.7
|
|
7.9
|
|
||||||
Expected return on plan assets
|
(6.3
|
)
|
(6.4
|
)
|
(2.2
|
)
|
(2.6
|
)
|
(8.5
|
)
|
(9.0
|
)
|
||||||
Amortization of prior service cost
|
0.4
|
|
0.4
|
|
—
|
|
—
|
|
0.4
|
|
0.4
|
|
||||||
Net periodic benefit cost (credit)
|
$
|
2.0
|
|
$
|
2.6
|
|
$
|
(0.3
|
)
|
$
|
(0.3
|
)
|
$
|
1.7
|
|
$
|
2.3
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Components of net periodic benefit (credit) cost:
|
|
|
|
||||
Interest cost
|
$
|
0.5
|
|
|
$
|
1.9
|
|
Expected return on plan assets
|
(0.1
|
)
|
|
(0.8
|
)
|
||
Amortization of prior service credit
|
(2.4
|
)
|
|
(0.5
|
)
|
||
Net periodic benefit (credit) cost
|
$
|
(2.0
|
)
|
|
$
|
0.6
|
|
|
Foreign currency translation adjustments
|
Pension and other postretirement liability adjustments
|
Unrealized loss on marketable securities
|
Change in fair value of derivative financial instruments
|
Total
|
||||||||||
Balance at December 31, 2019
|
$
|
(115.3
|
)
|
$
|
66.9
|
|
$
|
—
|
|
$
|
(1.7
|
)
|
$
|
(50.1
|
)
|
Other comprehensive (loss) income before
reclassifications and income taxes |
(78.8
|
)
|
0.2
|
|
(0.5
|
)
|
6.4
|
|
(72.7
|
)
|
|||||
Amounts reclassified from accumulated other
comprehensive (loss) income before income
taxes
|
—
|
|
(2.0
|
)
|
—
|
|
(0.6
|
)
|
(2.6
|
)
|
|||||
Income tax (expense) benefit
|
—
|
|
0.5
|
|
0.1
|
|
(1.6
|
)
|
(1.0
|
)
|
|||||
Net current period other comprehensive
income (loss), net of income taxes
|
(78.8
|
)
|
(1.3
|
)
|
(0.4
|
)
|
4.2
|
|
(76.3
|
)
|
|||||
Noncontrolling interest
|
7.5
|
|
—
|
|
|
—
|
|
7.5
|
|
||||||
Net current period comprehensive (loss)
income, net of income taxes and
noncontrolling interest
|
(71.3
|
)
|
(1.3
|
)
|
(0.4
|
)
|
4.2
|
|
(68.8
|
)
|
|||||
Balance at March 31, 2020
|
$
|
(186.6
|
)
|
$
|
65.6
|
|
$
|
(0.4
|
)
|
$
|
2.5
|
|
$
|
(118.9
|
)
|
|
Foreign currency translation adjustments
|
Pension and other postretirement liability adjustments
|
Unrealized loss on marketable securities
|
Change in fair value of derivative financial instruments
|
Total
|
||||||||||
Balance at December 31, 2018
|
$
|
(95.6
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
0.3
|
|
$
|
(95.3
|
)
|
Other comprehensive (loss) income before
reclassifications and income taxes |
(4.2
|
)
|
(0.1
|
)
|
—
|
|
0.4
|
|
(3.9
|
)
|
|||||
Amounts reclassified from accumulated other
comprehensive (loss) income before income
taxes
|
—
|
|
—
|
|
—
|
|
(1.2
|
)
|
(1.2
|
)
|
|||||
Income tax benefit
|
—
|
|
—
|
|
—
|
|
0.2
|
|
0.2
|
|
|||||
Net current period other comprehensive
loss, net of income taxes |
(4.2
|
)
|
(0.1
|
)
|
—
|
|
(0.6
|
)
|
(4.9
|
)
|
|||||
Noncontrolling interest
|
(0.9
|
)
|
—
|
|
—
|
|
—
|
|
(0.9
|
)
|
|||||
Net current period comprehensive loss,
net of income taxes and noncontrolling
interest
|
(5.1
|
)
|
(0.1
|
)
|
—
|
|
(0.6
|
)
|
(5.8
|
)
|
|||||
Balance at March 31, 2019
|
$
|
(100.7
|
)
|
$
|
(0.1
|
)
|
$
|
—
|
|
$
|
(0.3
|
)
|
$
|
(101.1
|
)
|
|
March 31, 2020
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
385.0
|
|
$
|
382.6
|
|
$
|
2.4
|
|
$
|
—
|
|
Cash and cash equivalents measured at net asset value
|
2.5
|
|
|
|
|
|
|
|
||||
Restricted cash
|
6.5
|
|
6.5
|
|
—
|
|
—
|
|
||||
Short-term investments
|
61.1
|
|
36.0
|
|
25.1
|
|
—
|
|
||||
Foreign currency hedges
|
9.1
|
|
—
|
|
9.1
|
|
—
|
|
||||
Total Assets
|
$
|
464.2
|
|
$
|
425.1
|
|
$
|
36.6
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
||||||||
Foreign currency hedges
|
$
|
0.3
|
|
$
|
—
|
|
$
|
0.3
|
|
$
|
—
|
|
Total Liabilities
|
$
|
0.3
|
|
$
|
—
|
|
$
|
0.3
|
|
$
|
—
|
|
|
December 31, 2019
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
160.7
|
|
$
|
158.2
|
|
$
|
2.5
|
|
$
|
—
|
|
Cash and cash equivalents measured at net asset value
|
48.8
|
|
|
|
|
|||||||
Restricted cash
|
6.7
|
|
6.7
|
|
—
|
|
—
|
|
||||
Short-term investments
|
25.7
|
|
—
|
|
25.7
|
|
—
|
|
||||
Short-term investments measured at net asset value
|
0.1
|
|
|
|
|
|||||||
Foreign currency hedges
|
7.6
|
|
—
|
|
7.6
|
|
—
|
|
||||
Total Assets
|
$
|
249.6
|
|
$
|
164.9
|
|
$
|
35.8
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
||||||||
Foreign currency hedges
|
$
|
1.4
|
|
$
|
—
|
|
$
|
1.4
|
|
$
|
—
|
|
Total Liabilities
|
$
|
1.4
|
|
$
|
—
|
|
$
|
1.4
|
|
$
|
—
|
|
|
|
Amount of gain or (loss) recognized in income
|
||||||
|
|
Three Months Ended
March 31, |
||||||
Derivatives not designated as hedging instruments:
|
Location of gain or (loss) recognized in income
|
2020
|
|
2019
|
||||
Foreign currency forward contracts
|
Other income (expense), net
|
$
|
5.5
|
|
|
$
|
3.0
|
|
•
|
Mobile Industries serves OEM customers that manufacture off-highway equipment for the agricultural, mining and construction markets; on-highway vehicles including passenger cars, light trucks, and medium- and heavy-duty trucks; rail cars and locomotives; outdoor power equipment; rotorcraft and fixed-wing aircraft; and other mobile equipment. Beyond service parts sold to OEMs, aftermarket sales and services to individual end users, equipment owners, operators and maintenance shops are handled directly or through the Company's extensive network of authorized automotive and heavy-truck distributors.
|
•
|
Process Industries serves OEM and end-user customers in industries that place heavy demands on the fixed operating equipment they make or use in heavy and other general industrial sectors. This includes metals, cement and aggregate production; power generation and renewable energy sources; oil and gas extraction and refining; pulp and paper and food processing; automation and robotics; and health and critical motion control equipment. Other applications include marine equipment, gear drives, cranes, hoists and conveyors. This segment also supports aftermarket sales and service needs through its global network of authorized industrial distributors and through the provision of services directly to end users.
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
923.4
|
|
$
|
979.7
|
|
$
|
(56.3
|
)
|
(5.7
|
)%
|
Net income
|
84.0
|
|
95.3
|
|
(11.3
|
)
|
(11.9
|
)%
|
|||
Net income attributable to noncontrolling interest
|
3.3
|
|
3.4
|
|
(0.1
|
)
|
(2.9
|
)%
|
|||
Net income attributable to The Timken Company
|
$
|
80.7
|
|
$
|
91.9
|
|
$
|
(11.2
|
)
|
(12.2
|
)%
|
Diluted earnings per share
|
$
|
1.06
|
|
$
|
1.19
|
|
$
|
(0.13
|
)
|
(10.9
|
)%
|
Average number of shares – diluted
|
76,308,556
|
|
77,012,573
|
|
—
|
|
(0.9
|
)%
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
% Change
|
|||||||
Net Sales
|
$
|
923.4
|
|
$
|
979.7
|
|
$
|
(56.3
|
)
|
(5.7
|
)%
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
Change
|
|||||||
Gross profit
|
$
|
278.9
|
|
$
|
302.6
|
|
$
|
(23.7
|
)
|
(7.8
|
%)
|
Gross profit % to net sales
|
30.2
|
%
|
30.9
|
%
|
|
|
(70
|
) bps
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
Change
|
|||||||
Selling, general and administrative expenses
|
$
|
153.6
|
|
$
|
152.7
|
|
$
|
0.9
|
|
0.6
|
%
|
Selling, general and administrative expenses % to net sales
|
16.6
|
%
|
15.6
|
%
|
|
100
|
bps
|
|
Three Months Ended
March 31, |
|
|
|||||||
|
2020
|
2019
|
$ Change
|
% Change
|
||||||
Impairment charges
|
$
|
0.1
|
|
$
|
—
|
|
$
|
0.1
|
|
NM
|
Severance and related benefit costs
|
2.7
|
|
—
|
|
2.7
|
|
NM
|
|||
Exit costs
|
0.8
|
|
—
|
|
0.8
|
|
NM
|
|||
Total
|
$
|
3.6
|
|
$
|
—
|
|
$
|
3.6
|
|
NM
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
% Change
|
|||||||
Interest expense
|
$
|
(17.1
|
)
|
$
|
(18.0
|
)
|
$
|
0.9
|
|
(5.0
|
%)
|
Interest income
|
$
|
1.5
|
|
$
|
1.3
|
|
$
|
0.2
|
|
15.4
|
%
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
% Change
|
|||||||
Non-service pension and other postretirement
income
|
$
|
3.4
|
|
$
|
0.1
|
|
$
|
3.3
|
|
NM
|
|
Other income, net
|
4.1
|
|
3.3
|
|
0.8
|
|
24.2
|
%
|
|||
Total other income, net
|
$
|
7.5
|
|
$
|
3.4
|
|
$
|
4.1
|
|
120.6
|
%
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
% Change
|
|||||||
Provision for income taxes
|
$
|
29.6
|
|
$
|
41.3
|
|
$
|
(11.7
|
)
|
(28.3
|
)%
|
Effective tax rate
|
26.1
|
%
|
30.2
|
%
|
|
(410) bps
|
•
|
The Company acquired BEKA during the fourth quarter of 2019. The majority of the results for BEKA are reported in the Mobile Industries segment.
|
•
|
The Company acquired Diamond Chain during the second quarter of 2019. The majority of the results for Diamond Chain are reported in the Process Industries segment.
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
Change
|
|||||||
Net sales
|
$
|
466.7
|
|
$
|
500.0
|
|
$
|
(33.3
|
)
|
(6.7
|
%)
|
EBITDA
|
$
|
75.1
|
|
$
|
79.3
|
|
$
|
(4.2
|
)
|
(5.3
|
%)
|
EBITDA margin
|
16.1
|
%
|
15.9
|
%
|
|
20
|
bps
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
466.7
|
|
$
|
500.0
|
|
$
|
(33.3
|
)
|
(6.7
|
%)
|
Less: Acquisitions
|
26.4
|
|
—
|
|
26.4
|
|
NM
|
|
|||
Currency
|
(7.5
|
)
|
—
|
|
(7.5
|
)
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
447.8
|
|
$
|
500.0
|
|
$
|
(52.2
|
)
|
(10.4
|
%)
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
Change
|
|||||||
Net sales
|
$
|
456.7
|
|
$
|
479.7
|
|
$
|
(23.0
|
)
|
(4.8
|
%)
|
EBITDA
|
$
|
107.5
|
|
$
|
127.6
|
|
$
|
(20.1
|
)
|
(15.8
|
%)
|
EBITDA margin
|
23.5
|
%
|
26.6
|
%
|
|
(310) bps
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
2020
|
2019
|
$ Change
|
% Change
|
|||||||
Net sales
|
$
|
456.7
|
|
$
|
479.7
|
|
$
|
(23.0
|
)
|
(4.8
|
%)
|
Less: Acquisitions
|
21.3
|
|
—
|
|
21.3
|
|
NM
|
|
|||
Currency
|
(8.5
|
)
|
—
|
|
(8.5
|
)
|
NM
|
|
|||
Net sales, excluding the impact of acquisitions and currency
|
$
|
443.9
|
|
$
|
479.7
|
|
$
|
(35.8
|
)
|
(7.5
|
)%
|
|
Three Months Ended
March 31, |
|
|
|||||||
|
2020
|
2019
|
$ Change
|
Change
|
||||||
Corporate EBITDA
|
$
|
(11.1
|
)
|
$
|
(14.1
|
)
|
$
|
3.0
|
|
(21.3%)
|
Corporate EBTIDA % to net sales
|
(1.2
|
)%
|
(1.4
|
)%
|
|
20 bps
|
|
March 31,
2020 |
December 31,
2019 |
$ Change
|
% Change
|
|||||||
Cash and cash equivalents
|
$
|
387.5
|
|
$
|
209.5
|
|
$
|
178.0
|
|
85.0
|
%
|
Restricted cash
|
6.5
|
|
6.7
|
|
(0.2
|
)
|
(3.0
|
)%
|
|||
Accounts receivable, net
|
577.7
|
|
545.1
|
|
32.6
|
|
6.0
|
%
|
|||
Unbilled receivables
|
137.4
|
|
129.2
|
|
8.2
|
|
6.3
|
%
|
|||
Inventories, net
|
819.7
|
|
842.0
|
|
(22.3
|
)
|
(2.6
|
)%
|
|||
Deferred charges and prepaid expenses
|
35.7
|
|
36.7
|
|
(1.0
|
)
|
(2.7
|
)%
|
|||
Other current assets
|
127.7
|
|
105.4
|
|
22.3
|
|
21.2
|
%
|
|||
Total current assets
|
$
|
2,092.2
|
|
$
|
1,874.6
|
|
$
|
217.6
|
|
11.6
|
%
|
|
March 31,
2020 |
December 31,
2019 |
$ Change
|
% Change
|
|||||||
Property, plant and equipment, net
|
$
|
961.6
|
|
$
|
989.2
|
|
$
|
(27.6
|
)
|
(2.8
|
)%
|
|
March 31,
2020 |
December 31,
2019 |
$ Change
|
% Change
|
|||||||
Goodwill
|
$
|
987.9
|
|
$
|
993.7
|
|
$
|
(5.8
|
)
|
(0.6
|
)%
|
Other intangible assets
|
735.3
|
|
758.5
|
|
(23.2
|
)
|
(3.1
|
)%
|
|||
Operating lease assets
|
112.8
|
|
114.1
|
|
(1.3
|
)
|
(1.1
|
)%
|
|||
Non-current pension assets
|
7.1
|
|
3.4
|
|
3.7
|
|
108.8
|
%
|
|||
Non-current other postretirement benefit assets
|
—
|
|
36.6
|
|
(36.6
|
)
|
(100.0
|
)%
|
|||
Deferred income taxes
|
67.4
|
|
71.8
|
|
(4.4
|
)
|
(6.1
|
)%
|
|||
Other non-current assets
|
15.7
|
|
18.0
|
|
(2.3
|
)
|
(12.8
|
)%
|
|||
Total other assets
|
$
|
1,926.2
|
|
$
|
1,996.1
|
|
$
|
(69.9
|
)
|
(3.5
|
)%
|
|
March 31,
2020 |
December 31,
2019 |
$ Change
|
% Change
|
|||||||
Short-term debt
|
$
|
109.0
|
|
$
|
17.3
|
|
$
|
91.7
|
|
530.1
|
%
|
Current portion of long-term debt
|
64.1
|
|
64.7
|
|
(0.6
|
)
|
(0.9
|
)%
|
|||
Short-term operating lease liabilities
|
28.6
|
|
28.3
|
|
0.3
|
|
1.1
|
%
|
|||
Accounts payable
|
296.0
|
|
301.7
|
|
(5.7
|
)
|
(1.9
|
)%
|
|||
Salaries, wages and benefits
|
88.3
|
|
134.5
|
|
(46.2
|
)
|
(34.3
|
)%
|
|||
Income taxes payable
|
15.8
|
|
17.8
|
|
(2.0
|
)
|
(11.2
|
)%
|
|||
Other current liabilities
|
168.0
|
|
172.3
|
|
(4.3
|
)
|
(2.5
|
)%
|
|||
Total current liabilities
|
$
|
769.8
|
|
$
|
736.6
|
|
$
|
33.2
|
|
4.5
|
%
|
|
March 31,
2020 |
December 31,
2019 |
$ Change
|
% Change
|
|||||||
Long-term debt
|
$
|
1,785.8
|
|
$
|
1,648.1
|
|
$
|
137.7
|
|
8.4
|
%
|
Accrued pension benefits
|
164.5
|
|
165.1
|
|
(0.6
|
)
|
(0.4
|
)%
|
|||
Accrued postretirement benefits
|
44.8
|
|
31.8
|
|
13.0
|
|
40.9
|
%
|
|||
Long-term operating lease liabilities
|
70.8
|
|
71.3
|
|
(0.5
|
)
|
(0.7
|
)%
|
|||
Deferred income taxes
|
158.7
|
|
168.2
|
|
(9.5
|
)
|
(5.6
|
)%
|
|||
Other non-current liabilities
|
85.3
|
|
84.0
|
|
1.3
|
|
1.5
|
%
|
|||
Total non-current liabilities
|
$
|
2,309.9
|
|
$
|
2,168.5
|
|
$
|
141.4
|
|
6.5
|
%
|
|
March 31,
2020 |
December 31,
2019 |
$ Change
|
% Change
|
|||||||
Common shares
|
$
|
973.2
|
|
$
|
990.7
|
|
$
|
(17.5
|
)
|
(1.8
|
)%
|
Earnings invested in the business
|
1,964.8
|
|
1,907.4
|
|
57.4
|
|
3.0
|
%
|
|||
Accumulated other comprehensive loss
|
(118.9
|
)
|
(50.1
|
)
|
(68.8
|
)
|
137.3
|
%
|
|||
Treasury shares
|
(1,001.7
|
)
|
(979.8
|
)
|
(21.9
|
)
|
2.2
|
%
|
|||
Noncontrolling interest
|
82.9
|
|
86.6
|
|
(3.7
|
)
|
(4.3
|
)%
|
|||
Total shareholders’ equity
|
$
|
1,900.3
|
|
$
|
1,954.8
|
|
$
|
(54.5
|
)
|
(2.8
|
)%
|
|
Three Months Ended
March 31, |
|
|||||||
|
2020
|
2019
|
$ Change
|
||||||
Net cash provided by operating activities
|
$
|
56.2
|
|
$
|
52.3
|
|
$
|
3.9
|
|
Net cash used in investing activities
|
(31.6
|
)
|
(19.6
|
)
|
(12.0
|
)
|
|||
Net cash provided by financing activities
|
166.5
|
|
73.4
|
|
93.1
|
|
|||
Effect of exchange rate changes on cash
|
(13.3
|
)
|
0.9
|
|
(14.2
|
)
|
|||
Increase in cash, cash equivalents and restricted cash
|
$
|
177.8
|
|
$
|
107.0
|
|
$
|
70.8
|
|
|
Three Months Ended
March 31, |
|
|||||||
|
2020
|
2019
|
$ Change
|
||||||
Cash (Used) Provided:
|
|
|
|
||||||
Accounts receivable
|
$
|
(47.6
|
)
|
$
|
(65.0
|
)
|
$
|
17.4
|
|
Unbilled receivables
|
(8.3
|
)
|
(6.6
|
)
|
(1.7
|
)
|
|||
Inventories
|
0.3
|
|
(4.1
|
)
|
4.4
|
|
|||
Trade accounts payable
|
—
|
|
20.2
|
|
(20.2
|
)
|
|||
Other accrued expenses
|
(34.3
|
)
|
(58.0
|
)
|
23.7
|
|
|||
Cash used in working capital items
|
$
|
(89.9
|
)
|
$
|
(113.5
|
)
|
$
|
23.6
|
|
|
Three Months Ended
March 31, |
|
|||||||
|
2020
|
2019
|
$ Change
|
||||||
Accrued income tax expense
|
$
|
29.6
|
|
$
|
41.3
|
|
$
|
(11.7
|
)
|
Income tax payments
|
(20.8
|
)
|
(13.6
|
)
|
(7.2
|
)
|
|||
Other miscellaneous items
|
(1.4
|
)
|
(2.6
|
)
|
1.2
|
|
|||
Change in income taxes
|
$
|
7.4
|
|
$
|
25.1
|
|
$
|
(17.7
|
)
|
|
March 31,
2020 |
December 31,
2019 |
||||
Short-term debt
|
$
|
109.0
|
|
$
|
17.3
|
|
Current portion of long-term debt
|
64.1
|
|
64.7
|
|
||
Long-term debt
|
1,785.8
|
|
1,648.1
|
|
||
Total debt
|
$
|
1,958.9
|
|
$
|
1,730.1
|
|
Less: Cash and cash equivalents
|
387.5
|
|
209.5
|
|
||
Net debt
|
$
|
1,571.4
|
|
$
|
1,520.6
|
|
|
March 31,
2020 |
December 31,
2019 |
||||
Net debt
|
$
|
1,571.4
|
|
$
|
1,520.6
|
|
Total equity
|
1,900.3
|
|
1,954.8
|
|
||
Net debt plus total equity (capital)
|
$
|
3,471.7
|
|
$
|
3,475.4
|
|
Ratio of net debt to capital
|
45.3
|
%
|
43.8
|
%
|
•
|
deterioration in world economic conditions, or in economic conditions in any of the geographic regions in which the Company or its customers or suppliers conduct business, including adverse effects from a global economic slowdown, terrorism, or hostilities. This includes: political risks associated with the potential instability of governments and legal systems in countries in which the Company or its customers or suppliers conduct business, changes in currency valuations and recent world events that have increased the risks posed by international trade disputes, tariffs and sanctions;
|
•
|
negative impacts to the Company's business, results of operations, financial position or liquidity, disruption to the Company's supply chains, negative impacts to customer demand or operations, and availability and health of employees, as a result of COVID-19 or other pandemics and associated governmental measures such as restrictions on travel and manufacturing operations;
|
•
|
the effects of fluctuations in customer demand on sales, product mix and prices in the industries in which the Company operates. This includes: the ability of the Company to respond to rapid changes in customer demand, the effects of customer or supplier bankruptcies or liquidations, the impact of changes in industrial business cycles, the effects of distributor inventory corrections reflecting de-stocking of the supply chain and whether conditions of fair trade continue in the Company's markets;
|
•
|
competitive factors, including changes in market penetration, increasing price competition by existing or new foreign and domestic competitors, the introduction of new products or services by existing and new competitors, and new technology that may impact the way the Company’s products are produced, sold or distributed;
|
•
|
changes in operating costs. This includes: the effect of changes in the Company’s manufacturing processes; changes in costs associated with varying levels of operations and manufacturing capacity; availability and cost of raw materials and energy; changes in the expected costs associated with product warranty claims; changes resulting from inventory management and cost reduction initiatives; the effects of unplanned plant shutdowns; and changes in the cost of labor and benefits;
|
•
|
the success of the Company’s operating plans, announced programs, initiatives and capital investments; the ability to integrate acquired companies; and the ability of acquired companies to achieve satisfactory operating results, including results being accretive to earnings;
|
•
|
the Company’s ability to maintain appropriate relations with unions or works councils that represent Company associates in certain locations in order to avoid disruptions of business and to maintain the continued service of our management and other key employees;
|
•
|
unanticipated litigation, claims, investigations or assessments. This includes: claims, investigations or problems related to intellectual property, product liability or warranty, foreign export and trade laws, competition and anti-bribery laws, environmental or health and safety issues, data privacy and taxes;
|
•
|
changes in worldwide financial and capital markets, including availability of financing and interest rates on satisfactory terms, which affect the Company’s cost of funds and/or ability to raise capital, as well as customer demand and the ability of customers to obtain financing to purchase the Company’s products or equipment that contain the Company’s products;
|
•
|
the Company's ability to satisfy its obligations and comply with covenants under its debt agreements, maintain favorable credit ratings and its ability to renew or refinance borrowings on favorable terms;
|
•
|
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; and
|
•
|
those items identified under Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
|
(a)
|
Disclosure Controls and Procedures
|
(b)
|
Changes in Internal Control Over Financial Reporting
|
Period
|
Total number
of shares
purchased (1)
|
|
Average
price paid
per share (2)
|
|
Total number
of shares
purchased as
part of publicly
announced
plans or
programs
|
|
Maximum
number of
shares that
may yet
be purchased
under the plans
or programs (3)
|
|
|
1/1/20 - 1/31/20
|
707
|
|
$
|
56.42
|
|
—
|
|
5,357,042
|
|
2/1/20 - 2/29/20
|
573,003
|
|
53.46
|
|
390,000
|
|
4,967,042
|
|
|
3/1/20 - 3/31/20
|
610,000
|
|
35.85
|
|
610,000
|
|
4,357,042
|
|
|
Total
|
1,183,710
|
|
$
|
44.39
|
|
1,000,000
|
|
|
|
(1)
|
Of the shares purchased in January and February, 707 and 183,003, respectively, represent common shares of the Company that were owned and tendered by employees to exercise stock options and to satisfy withholding obligations in connection with the exercise of stock options or vesting of restricted shares.
|
(2)
|
For shares tendered in connection with the vesting of restricted shares, the average price paid per share is an average calculated using the daily high and low of the Company's common shares as quoted on the New York Stock Exchange at the time of vesting. For shares tendered in connection with the exercise of stock options, the price paid is the real-time trading stock price at the time the options are exercised.
|
(3)
|
On February 6, 2017, the Company announced that its Board of Directors approved a share purchase plan pursuant to which the Company may purchase up to ten million of its common shares in the aggregate. This share repurchase plan expires on February 28, 2021. The Company may purchase shares from time to time in open market purchases or privately negotiated transactions. The Company may make all or part of the purchases pursuant to accelerated share repurchases or Rule 10b5-1 plans.
|
|
|
THE TIMKEN COMPANY
|
Date: May 1, 2020
|
|
By: /s/ Richard G. Kyle
|
|
|
Richard G. Kyle
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Date: May 1, 2020
|
|
By: /s/ Philip D. Fracassa
|
|
|
Philip D. Fracassa
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
1 Year Timken Chart |
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