Jefferies Industrials Conference August 10, 2015 NYC
Company Overview and Direction
Timken at a Glance Ticker NYSE: TKR Legacy c. 1899 2014 Sales 3.1B Employees 14,000 worldwide Global Footprint Headquarters in North Canton, OH Operations in 28 countries Dividend Payout every quarter since IPO in 1922…
An Attractive Business Profile End-Market Sectors Product Offering Channel Overview Industrial Machinery 19% Power Transmission Automotive 15% Products Distribution/ Rail 11% 9% End User Heavy Truck 8% Services Energy 7% 9%…
The Timken Business Model Growth Markets Challenging Driven by Strong Technology & Applications Macros Know How for Attractive Opportunities Competitive Differentiators Disciplined Filter Aftermarket Business & Rebuild…
The Growth Plan: What You Can Expect Capture Share and 1. Outgrow Our End Markets Market Growth Grow International Sales and 2. Win Globally Focus on Emerging Markets Leverage Technology and 3. Accelerate Product…
1. Capture Share and Market Growth Apply Timken Business Model Focus on Markets with Challenging Applications Strong Macro Fundamentals High costs of failure Mission-Critical, Demanding High costs of substitution Applications…
2. Win Globally A Growing International Footprint EMEA 18% Russia Canada U.K. Germany Poland NA Czech Republic France Japan 57% Spain ItalyRomania China U.S. Turkey LatAm South Korea India Mexico 8% U.A.E. Taiwan APAC…
3. Leverage Technology and Know How to Grow Organically Accelerate Product Development Rate Potential for Continued Penetration of 60B Bearings Market Still Very High Current: Global Leader in Tapered Roller Bearings Aspiration:…
3. Leverage Technology and Know How to Grow Organically Bearing Housed Unit Portfolio Transformation UC Series Ball Bearing Type E Ball bearing Split roller housed units SNT Plummer housed units Spherical roller bearing steel…
4. Pursue Strategic Bolt-On Acquisitions Market and Product Expansion Our Market Space is Broader than Bearings Adjacent Products & Services Chains, belts, gear drives, couplings, brakes, sprockets, clutches, lubrication, condition…
4. Portfolio Transformation Building for Growth Electric motor Carlstar Belts repair, related services, up-tower wind maintenance Electric motor and repair Industrial gear Electric motor repair and drive and repair repair and…
4. Carlstar Belts Business* A leading North American supplier, Key Metrics* (M) offering power transmission belts for industrial, commercial and consumer Revenue 140 applications Adj. EBITDA 22 Portfolio features more than…
4. Building Out Our Power Transmission Offering Timken Power Transmission Portfolio Housed Chain & Gears & Lubrication Units Augers Belts Services Systems Strong Strategic Fit 15
4. Financial Summary Transaction Highlights Synergy Drivers Purchase price of 220M Leverage Timken and Carlstar Funded with cash and debt customer relationships and Transaction structure results in 23M NPV distribution channels to…
Investment Summary Why Own Timken Differentiated Business Model delivers strong financial results Fragmented, diverse end-markets and customers Attractive mix drives margins Global growth opportunity Strong, results-oriented…
Financial Review 18
1H 2015 Financial Summary Net Sales - ( Millions) Sales of 1,451 million decreased 1,526 (72) 5% from prior year; excluding currency of almost 5%, sales were (12) 9 1,451 relatively flat compared to prior year Growth in wind,…
2015 Full-Year Outlook Sales: down approximately 7 to 8% Sales (vs. 2014) Net Negative currency of 5% Organic Currency Sales Mobile Industries (3) - (4)% (5)% Down 8 - 9% Declines in aerospace, agriculture, industrial aftermarket…
Capital Allocation Priorities Disciplined Approach to Drive Shareholder Value Capital Expenditures Organic Growth and Margin Improvement CapEx: 4% of Sales Dividend Target: 25 35% Payout Ratio Acquisitions Share…
Balance Sheet and Leverage Balance Sheet (6/30/15) ( Millions) Net Debt/Capital Capital Structure ( Millions) Net Debt Net Debt/ Capital 800 40% Cash 256 Target: 30 40% Debt 638 600 30% Net Debt 382 22% 400 20% Equity 1,371…
Key Take-Aways Solid performance in first half despite market and currency headwinds Generating modest outgrowth Managing inventory levels well leading to strong free cash flow Focused on improving cost structure Executing…
Appendix 24
GAAP Reconciliation: Consolidated EBIT & EBIT Margin Reconciliation of EBIT to GAAP Net Income (Loss), and EBIT Margin, After Adjustments, to Net Income (Loss) as a Percentage of Sales and EBIT, After Adjustments, to Net Income…
GAAP Reconciliation: Net Debt/Capital Reconciliation of Net Debt to Total Debt and the Ratio of Net Debt to Capital: This reconciliation is provided as additional relevant information about the Company's financial position. Capital,…
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