NORTH CANTON, Ohio - The Timken Company (NYSE: TKR; www.timken.com), a global leader in engineered bearings and industrial motion products, today reported first-quarter 2023 sales of $1.26 billion, up 12.3 percent from the same period a year ago. The increase was driven by strong organic growth in both the Engineered Bearings and Industrial Motion segments, and the favorable impact of acquisitions (net of divestitures), partially offset by unfavorable foreign currency translation. Organically, first-quarter sales were up 10.9 percent versus the prior year.
Timken posted net income in the first quarter of $122.3 million or a record $1.67 per diluted share. This compares to net income of $118.2 million or $1.56 per diluted share for the same period a year ago.
Excluding special items (detailed in the attached tables), adjusted net income in the first quarter was $153.5 million or $2.09 per diluted share, an all-time record for any quarter. This compares to adjusted net income of $129.7 million or $1.72 per diluted share for the same period in 2022. Adjusted EBITDA in the quarter was $265.5 million or 21.0 percent of sales, compared with $225.1 million or 20.0 percent of sales in the first quarter of last year.
Net cash from operations for the quarter was $78.6 million and free cash flow was $36.9 million. During the quarter, the company returned $77.6 million of cash to shareholders through dividends and the repurchase of 670 thousand shares of company stock. In addition, the company acquired the assets of American Roller Bearing Co. at the end of January. Also, in early April, Timken completed its previously announced acquisition of Nadella Group, which expands and scales the company's leading linear motion product portfolio.
'Timken maintained its strong momentum and delivered an excellent start to the year, achieving record revenue and earnings per share in the first quarter while expanding operating margins,' said Richard G. Kyle, Timken president and chief executive officer. 'Our performance continues to demonstrate the value we can create for our stakeholders through dynamic macro environments.'
First-Quarter 2023 Segment Results
Engineered Bearings sales of $900.7 million increased 16.6 percent from the same period a year ago. The increase was driven by organic growth across most sectors led by renewable energy, distribution and rail, and the favorable impact of acquisitions (net), partially offset by unfavorable foreign currency translation.
EBITDA for the quarter was $205.0 million or 22.8 percent of sales, compared with EBITDA of $168.3 million or 21.8 percent of sales for the same period a year ago. The increase in EBITDA was driven primarily by the impact of favorable price/mix, higher volume and lower material & logistics costs, as well as the benefit of acquisitions, partially offset by higher manufacturing and SG&A costs and the unfavorable impact of currency.
Excluding special items, adjusted EBITDA in the quarter was $203.8 million or 22.6 percent of sales, compared with $173.9 million or 22.5 percent of sales in the first quarter of last year.
Industrial Motion sales of $362.1 million increased 2.8 percent compared with the same period a year ago. The increase was driven by organic growth across most platforms led by automatic lubrication systems, partially offset by unfavorable foreign currency translation and the unfavorable impact of divestitures (net).
EBITDA for the quarter was $48.2 million or 13.3 percent of sales, compared with EBITDA of $62.4 million or 17.7 percent of sales for the same period a year ago. The decrease in EBITDA was driven primarily by a goodwill impairment charge in the current period related to the recent change in operating segments, as well as higher SG&A and manufacturing costs, partially offset by the impact of favorable price/mix and higher volume.
Excluding special items, adjusted EBITDA in the quarter was $76.9 million or 21.2 percent of sales, compared with $63.4 million or 18.0 percent of sales in the first quarter of last year.
2023 Outlook
Timken is increasing its 2023 outlook, with full-year earnings per diluted share now forecasted to be in the range of $5.90 to $6.40 and adjusted earnings per diluted share in the range of $7.00 to $7.50. The company is now planning for 2023 revenue to be up approximately 9.5 percent in total at the midpoint from 2022, an increase from its prior outlook of 6 percent growth at the midpoint.
'Timken is raising its full-year guidance to reflect the company's strong first-quarter performance, the impact of the Nadella acquisition and an improved outlook for the rest of the year,' said Kyle. 'We now expect operating margins to increase in 2023, reflecting favorable price-cost and better operational execution. While uncertainty remains elevated for the second half, our backlog is high and customer demand is strong.'
Kyle continued, 'We are confident in our ability to achieve higher performance in 2023 and beyond, as we continue to execute our strategy to advance Timken as a diversified industrial leader.'
About The Timken Company
The Timken Company (NYSE: TKR; www.timken.com) designs a growing portfolio of engineered bearings and industrial motion products. With more than a century of knowledge and innovation, we continuously improve the reliability and efficiency of global machinery and equipment to move the world forward. Timken posted $4.5 billion in sales in 2022 and employs more than 19,000 people globally, operating from 46 countries. Timken has been recognized among America's Most Responsible Companies by Newsweek, the World's Most Ethical Companies by Ethisphere, America's Most Innovative Companies by Fortune and America's Best Large Employers, Best Employers for New Graduates and Best Employers for Women by Forbes.
Certain statements in this release (including statements regarding the company's forecasts, estimates, plans and expectations) that are not historical in nature are 'forward-looking' statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, the statements related to expectations regarding the company's future financial performance, including information under the heading '2023 Outlook,' are forward-looking.
The company cautions that actual results may differ materially from those projected or implied in forward-looking statements due to a variety of important factors, including: the finalization of the company's financial statements for the first quarter of 2023; the company's ability to respond to the changes in its end markets that could affect demand for the company's products or services; unanticipated changes in business relationships with customers or their purchases from the company; changes in the financial health of the company's customers, which may have an impact on the company's revenues, earnings and impairment charges; logistical issues associated with port closures or congestion, delays or increased costs; the impact of changes to the company's accounting methods; political risks associated with government instability; recent world events that have increased the risks posed by international trade disputes, tariffs, sanctions and hostilities; weakness in global or regional general economic conditions and capital markets (as a result of financial stress affecting the banking system or otherwise); the impact of inflation on employee expenses, shipping costs, raw material costs, energy and fuel prices, and other production costs; the company's ability to satisfy its obligations under its debt agreements and renew or refinance borrowings on favorable terms in a rising interest rate environment; fluctuations in currency valuations; changes in the expected costs associated with product warranty claims; the ability to achieve satisfactory operating results in the integration of acquired companies, including realizing any accretion, synergies, and expected cashflow generation within expected timeframes or at all; fluctuations in customer demand; 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; the introduction of new disruptive technologies; unplanned plant shutdowns; the effects of government-imposed restrictions, commercial requirements, and company goals associated with climate change and emissions or other waste reduction initiatives; unanticipated litigation, claims, investigations or assessments; the company's ability to maintain positive relations with unions and works councils; the company's ability to compete for skilled labor and to attract, retain and develop management and other key employees; negative impacts to the company's operations or financial position as a result of COVID-19 or other epidemics and associated governmental measures; and the company's ability to complete and achieve the benefits of announced plans, programs, initiatives, acquisitions and capital investments. Additional factors are discussed in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended Dec. 31, 2022, quarterly reports on Form 10-Q and current reports on Form 8-K. Except as required by the federal securities laws, the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Contact:
Media
Scott Schroeder
T: 234.262.6420
E: scott.schroeder@timken.com
THE TIMKEN COMPANY 
