TKR Q4 Earnings Beat Estimates, Decline 15% Y/Y on Weak Demand

The Timken Company TKR reported fourth-quarter 2024 adjusted earnings per share (EPS) of $1.16, which beat the Zacks Consensus Estimate of 97 cents. The bottom line, however, marked a 15% year-over-year decline reflecting lower end-market demand in Europe and unfavorable foreign currency translation, partially offset by the benefit of acquisitions.Find the latest earnings estimates and surprises on Zacks Earnings Calendar.On a reported basis, the company delivered earnings of $1.01 per share compared with 83 cents in the prior-year quarter.Total revenues were $1.07 billion, down 1.6% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1.06 billion. Organically, sales were down 2.6%.Timken Company (The) Price, Consensus and EPS Surprise Timken Company (The) price-consensus-eps-surprise-chart | Timken Company (The) QuoteTimken Reports Margin ContractionThe cost of sales dipped 1.5% to $749 million from the prior-year quarter. The gross profit decreased 2% year over year to $325 million. The gross margin was 30.3% compared with 30.4% in the year-ago quarter.Selling, general and administrative expenses were down 1% year over year to $187.5 million. Operating income fell 5.2% year over year to $113 million. Adjusted EBITDA declined 9% year over year to $178 million. The adjusted EBITDA margin was 16.6%, a 130-basis-point contraction from 17.9% in the prior-year quarter.Timken’s Segment Performances in Q4The Engineered Bearings segment’s revenues fell 2% year over year to $708 million. This reflected lower demand in Europe and unfavorable foreign currency translation, which were somewhat offset by higher industrial distribution demand in the Americas and Asia. Our model had projected the segment’s revenues at $690 million. The Engineered Bearings segment’s adjusted EBITDA was $122 million, 8% lower than the year-ago quarter. Lower volume, higher logistics and manufacturing costs, and unfavorable foreign currency, partially offset by favorable price/mix, led to the decline. Our estimate for the segment’s EBITDA was $109 million.  The Industrial Motion segment’s revenues declined 0.3% year over year to $366 million, falling short of our projection of $372 million. Improved drive systems revenues and the contribution from acquisitions were offset by lower demand across most other platforms.The segment’s adjusted EBITDA was $71 million compared with $82 million in the third quarter of 2023. The decline was due to lower volume and higher manufacturing costs, partially offset by favorable price/mix, lower SG&A expenses and the benefit of acquisitions. Our estimate for the segment’s EBITDA was $68.7 million.  TKR’s Cash Flow & Balance Sheet UpdatesTimken ended 2024 with cash and cash equivalents of $373 million compared with $419 million at the end of 2023. Cash flow from operating activities was $476 million compared with $545 million in the prior year. The long-term debt as of Dec. 31, 2024, was $2.19 billion, up from $1.79 billion as of Dec. 31, 2023. Net debt to adjusted EBITDA was 2.0 as of the end of 2024, within its target of 1.5-2.5.During the year, Timken completed the acquisition of CGI, Inc., a manufacturer of precision drive systems for medical robotics and other automation sectors.Timken also increased its quarterly dividend by 3% to 34 cents per share during 2024, marking its eleventh consecutive year of higher annual dividends. The company returned $136.6 million to shareholders during the year through dividends and share repurchases.Timken’s 2024 PerformanceFor 2024, Timken’s adjusted earnings were $5.79 per share, which surpassed the Zacks Consensus Estimate of $5.61. The bottom line was higher than the company’s guided range of $5.55-$5.65 but marked an 18% decline from the prior year.Including one-time items, the company’s earnings were $4.99 per share compared with $5.47 in 2023.Total revenues fell 4% year over year to $4.57 billion. The top-line figure, however, beat the Zacks Consensus Estimate of $4.56 billion.The decline in revenues was due to lower end-market demand, including a significant decline in renewable energy in China and broad weakness in Europe, as well as unfavorable currency translation. This was partially mitigated by the impact of acquisitions and higher pricing. Organic sales were down 5.8%. Timken’s 2025 GuidanceFor 2025, Timken expects total revenues to decline 1-4% from the 2024 level. Organic sales are anticipated to be down 1% at the midpoint. The weakness in Europe is expected to persist while ROW (Americas and Asia) is likely to show a modest improvement. The company anticipates adjusted EPS to be between $5.30 and $5.80. The midpoint of the range indicates a year-over-year decline of 4%. It is implementing cost-reduction actions that are expected to lead to savings of approximately $75 million in 2025.TKR Stock’s Price PerformanceIn the past year, TKR shares have gained 2.1% compared with the industry’s 31% decline.Image Source: Zacks Investment ResearchTimken’s Zacks RankTimken currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Recent Earnings Performances of TKR’s PeersEmerson Electric Co. EMR reported first-quarter fiscal 2025 (ended Dec. 31, 2024) adjusted earnings of $1.38 per share, which beat the Zacks Consensus Estimate of $1.28. The bottom line increased 13.1% year over year.Emerson’s net sales of $4.18 billion missed the consensus estimate of $4.21 billion. The top line increased 1% year over year, driven by the solid performance of both its operating segments. The company’s underlying sales were up 2% year over year.Johnson Controls International plc JCI reported first-quarter fiscal 2025 (ended Dec. 31, 2024) adjusted earnings of 64 cents per share, which beat the Zacks Consensus Estimate of 59 cents. The bottom line increased 39.1% year over year.Total revenues (continuing operations) of $5.43 billion surpassed the consensus estimate of $5.33 billion. The top line increased 4.2% year over year whereas organic revenues increased 10%.RBC Bearings RBC reported third-quarter fiscal 2025 adjusted earnings of $2.34 per share, which beat the Zacks Consensus Estimate of $2.20. This was 26% higher than the earnings of $1.85 per share reported in the year-ago quarter. RBC Bearings’ revenues increased 5% year over year to $394.4 million, surpassing the consensus estimate by 0.17%.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 Emerson Electric Co. (EMR): Free Stock Analysis Report Johnson Controls International plc (JCI): Free Stock Analysis Report RBC Bearings Incorporated (RBC): Free Stock Analysis Report Timken Company (The) (TKR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks