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Shares of The Timken Company (TKR - Free Report) have moved down 7% since it reported second-quarter 2024 results on Jul 31, 2024, despite an earnings beat. Investors seem to be worried about the year-over-year declines in its top and bottom lines, reflecting significantly lower renewable energy demand in China.
TKR reported adjusted earnings per share (EPS) of $1.63 for the quarter, which marked an 18.9% year-over-year decline. However, the bottom line beat the Zacks Consensus Estimate of $1.60.
On a reported basis, the company delivered earnings of $1.36 per share in the quarter under review compared with earnings of $1.73 in the prior-year quarter.
Total revenues in the quarter were $1.182 billion, down 7.1% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1.180 billion.
Timken Company (The) Price, Consensus and EPS Surprise
The cost of sales fell 6.7% to $809 million from the prior-year quarter. The gross profit decreased 7.8% year over year to $374 million. The gross margin was 31.6% compared with 31.9% in the year-ago quarter.
Selling, general and administrative expenses were down 0.4% year over year to $184 million. Operating income fell 16.7% year over year to $167 million. Adjusted EBITDA declined 12.5% year over year to $230 million in the quarter under review. The adjusted EBITDA margin in the quarter was 19.5% compared with 20.7% in the prior-year quarter.
Segmental Performances
The Engineered Bearings segment’s revenues fell 8.6% year over year to $783 million. The downside was due to a decline in end-market demand and unfavorable foreign currency translations. We expected the segment’s sales to be $765 million in the quarter.
The Engineered Bearings segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $166.2 million compared with the year-ago quarter’s $189.6 million. Our prediction for the segment’s adjusted EBITDA was $167.8 million. The impacts of favorable price/mix were offset by lower volumes.
The Industrial Motion segment’s revenues fell 3.9% year over year to $399 million in second-quarter 2024. The decline was led by lower end-market demand. The reported figure missed our estimate of $410 million. The segment’s adjusted EBITDA was $79.7 million in the second quarter of 2024 compared with $85.9 million in the second quarter of 2023. We projected an adjusted EBITDA of $68 million.
Cash Flow & Balance Sheet Updates
Timken had cash and cash equivalents of $470 million at the end of the second quarter of 2024 compared with $419 million at the end of 2023. Cash flow from operating activities was $125 million in the second quarter of 2024 compared with $144 million in the prior-year quarter. In the quarter, Timken returned $53.6 million in cash to shareholders through dividends and share repurchases.
The long-term debt as of Jun 30, 2024, was $2.13 billion, up from $1.79 billion as of Dec 31, 2023. Net debt to adjusted EBITDA was 1.9 as of Jun 30, 2024, compared with 2.1 reported as of Dec 31, 2023.
In the quarter, the company increased its quarterly dividend by 3%.
2024 Guidance
Timken expects total revenues to decline 3-4% (compared with the earlier stated decline of 2-4%) from the 2023 reported level. The company anticipates adjusted EPS between $6.00 and $6.20, narrowed from the prior stated $6.00-$6.30.
Price Performance
In the past year, TKR shares have gained 2.8% compared with the industry’s 16.7% growth.
TriMas Corporation (TRS - Free Report) reported second-quarter 2024 adjusted EPS of 43 cents (including non-cash compensation expenses), which missed the Zacks Consensus Estimate of 53 cents. The bottom line declined 23.2% from the prior-year quarter.
The company's revenues increased 3.1% year over year to $241 million. Organic sales growth in packaging and aerospace product lines helped offset lower market demand for products used in some industrial, and oil and gas applications in the Specialty Products segment. The top line beat the Zacks Consensus Estimate of $232 million.
Kaiser Aluminum (KALU - Free Report) posted second-quarter adjusted EPS of 65 cents, which missed the Zacks Consensus Estimate of 94 cents. The bottom line fell 48% from the year-ago quarter.
Net sales of KALU declined 5% year over year to $773 million and missed the consensus estimate of $793 million.
Northwest Pipe Co. (NWPX - Free Report) came out with second-quarter earnings of 86 cents per share, beating the Zacks Consensus Estimate of 67 cents per share. This compares with earnings of 74 cents per share recorded a year ago.
Northwest Pipe posted revenues of $129 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate of $120 million. The top line increased 12.1% year over year.
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Timken (TKR) Shares Decline 7% Despite Q2 Earnings Beat
Shares of The Timken Company (TKR - Free Report) have moved down 7% since it reported second-quarter 2024 results on Jul 31, 2024, despite an earnings beat. Investors seem to be worried about the year-over-year declines in its top and bottom lines, reflecting significantly lower renewable energy demand in China.
TKR reported adjusted earnings per share (EPS) of $1.63 for the quarter, which marked an 18.9% year-over-year decline. However, the bottom line beat the Zacks Consensus Estimate of $1.60.
On a reported basis, the company delivered earnings of $1.36 per share in the quarter under review compared with earnings of $1.73 in the prior-year quarter.
Total revenues in the quarter were $1.182 billion, down 7.1% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1.180 billion.
Timken Company (The) Price, Consensus and EPS Surprise
Timken Company (The) price-consensus-eps-surprise-chart | Timken Company (The) Quote
Costs & Margins
The cost of sales fell 6.7% to $809 million from the prior-year quarter. The gross profit decreased 7.8% year over year to $374 million. The gross margin was 31.6% compared with 31.9% in the year-ago quarter.
Selling, general and administrative expenses were down 0.4% year over year to $184 million. Operating income fell 16.7% year over year to $167 million. Adjusted EBITDA declined 12.5% year over year to $230 million in the quarter under review. The adjusted EBITDA margin in the quarter was 19.5% compared with 20.7% in the prior-year quarter.
Segmental Performances
The Engineered Bearings segment’s revenues fell 8.6% year over year to $783 million. The downside was due to a decline in end-market demand and unfavorable foreign currency translations. We expected the segment’s sales to be $765 million in the quarter.
The Engineered Bearings segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $166.2 million compared with the year-ago quarter’s $189.6 million. Our prediction for the segment’s adjusted EBITDA was $167.8 million. The impacts of favorable price/mix were offset by lower volumes.
The Industrial Motion segment’s revenues fell 3.9% year over year to $399 million in second-quarter 2024. The decline was led by lower end-market demand. The reported figure missed our estimate of $410 million. The segment’s adjusted EBITDA was $79.7 million in the second quarter of 2024 compared with $85.9 million in the second quarter of 2023. We projected an adjusted EBITDA of $68 million.
Cash Flow & Balance Sheet Updates
Timken had cash and cash equivalents of $470 million at the end of the second quarter of 2024 compared with $419 million at the end of 2023. Cash flow from operating activities was $125 million in the second quarter of 2024 compared with $144 million in the prior-year quarter. In the quarter, Timken returned $53.6 million in cash to shareholders through dividends and share repurchases.
The long-term debt as of Jun 30, 2024, was $2.13 billion, up from $1.79 billion as of Dec 31, 2023. Net debt to adjusted EBITDA was 1.9 as of Jun 30, 2024, compared with 2.1 reported as of Dec 31, 2023.
In the quarter, the company increased its quarterly dividend by 3%.
2024 Guidance
Timken expects total revenues to decline 3-4% (compared with the earlier stated decline of 2-4%) from the 2023 reported level. The company anticipates adjusted EPS between $6.00 and $6.20, narrowed from the prior stated $6.00-$6.30.
Price Performance
In the past year, TKR shares have gained 2.8% compared with the industry’s 16.7% growth.
Image Source: Zacks Investment Research
Zacks Rank
Timken currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
How Did TKR’s Industry Peers Fare in Q2?
TriMas Corporation (TRS - Free Report) reported second-quarter 2024 adjusted EPS of 43 cents (including non-cash compensation expenses), which missed the Zacks Consensus Estimate of 53 cents. The bottom line declined 23.2% from the prior-year quarter.
The company's revenues increased 3.1% year over year to $241 million. Organic sales growth in packaging and aerospace product lines helped offset lower market demand for products used in some industrial, and oil and gas applications in the Specialty Products segment. The top line beat the Zacks Consensus Estimate of $232 million.
Kaiser Aluminum (KALU - Free Report) posted second-quarter adjusted EPS of 65 cents, which missed the Zacks Consensus Estimate of 94 cents. The bottom line fell 48% from the year-ago quarter.
Net sales of KALU declined 5% year over year to $773 million and missed the consensus estimate of $793 million.
Northwest Pipe Co. (NWPX - Free Report) came out with second-quarter earnings of 86 cents per share, beating the Zacks Consensus Estimate of 67 cents per share. This compares with earnings of 74 cents per share recorded a year ago.
Northwest Pipe posted revenues of $129 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate of $120 million. The top line increased 12.1% year over year.