Timken Co 8-K, filed Jan 30, 2020

About this 8-K

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Timken Co (TKR)

8-K 2020-01-30 For: 2020-01-30

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Added on April 10, 2026

Timken Co filed this 8-K on January 30, 2020.

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Item 2.02: Financial results

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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)



Exhibit No.		Description
99.1		EBITDA Results for the first three quarters of 2019, each quarter of 2018, and the years ended December 31, 2018, 2017, 2016 and 2015
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)



		THE TIMKEN COMPANY

	By:	/s/ Shelly M. Chadwick
		Shelly M. Chadwick
		Vice President - Finance and Chief Accounting Officer (Principal Accounting Officer)
Date:	January 30, 2020



Exhibit No.		Description
99.1		EBITDA Results for the first three quarters of 2019, each quarter of 2018, and the years ended December 31, 2018, 2017, 2016 and 2015
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)



Date of Report (Date of earliest event reported):	January 30, 2020



Summary of Net Income, EBITDA and Adjusted EBITDA - 2019 and 2018 ⁽¹⁾
(Unaudited)
Management believes consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP measure that is useful to investors as it is representative of the Company's performance and that it is appropriate to compare GAAP net income to consolidated EBITDA. Management also believes that the non-GAAP measure of adjusted EBITDA is useful to investors as it is representative of the Company's core operations and is used in the management of the business, including decisions concerning the allocation of resources and assessment of performance.

	Three Months Ended			Three Months Ended			Three Months Ended			NIne Months Ended
(Dollars in millions)	March 31, 2019			June 30, 2019			September 30, 2019			September 30, 2019
Net Income	$	95.3		$	94.9		$	66.7		$	256.9

Earnings before interest, taxes, depreciation and amortization (EBITDA)
Mobile	79.3			78.0			70.1			227.4
Process	127.6			125.7			116.5			369.8
Corporate (including pension-related costs)	(14.1		)	(15.3		)	(28.1		)	(57.5		)
Total Company EBITDA	$	192.8		$	188.4		$	158.5		$	539.7

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)
Mobile	$	83.9		$	78.6		$	71.9		234.4
Process	131.2			129.7			119.2			380.1
Corporate	(12.7		)	(11.5		)	(9.8		)	(34.0		)
Total Company Adjusted EBITDA	$	202.4		$	196.8		$	181.3		$	580.5



Reconciliation of EBITDA and Adjusted EBITDA to GAAP Net Income and EBITDA Margin and Adjusted EBITDA Margin, to Net Income as a Percentage of Sales:
(Unaudited)
The following reconciliation is provided as additional relevant information about the Company's performance deemed useful to investors. Management believes consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP measure that is useful to investors as it is representative of the Company's performance and that it is appropriate to compare GAAP net income to consolidated EBITDA. Management also believes that the non-GAAP measures of adjusted EBITDA and adjusted EBITDA margin are useful to investors as they are representative of the Company's core operations and are used in the management of the business, including decisions concerning the allocation of resources and assessment of performance.

	Three Months Ended March 31, 2019			Percentage to Net Sales		Three Months Ended June 30, 2019			Percentage to Net Sales		Three Months Ended September 30, 2019			Percentage to Net Sales		Nine Months Ended September 30, 2019			Percentage to Net Sales
(Dollars in millions)
Net Sales	$	979.7				$	1,000.0				$	914.0				$	2,893.7

Net Income	$	95.3		9.7	%	$	94.9		9.5	%	$	66.7		7.3	%	$	256.9		8.9	%
Provision for income taxes	41.3			4.2	%	33.6			3.4	%	35.5			3.9	%	110.4			3.8	%
Interest expense	18.0			1.8	%	19.3			1.9	%	18.2			2.0	%	55.5			1.9	%
Interest income	(1.3		)	(0.1	)%	(1.1		)	(0.1	)%	(1.1		)	(0.1	)%	(3.5		)	(0.1	)%
Depreciation and amortization	39.5			4.1	%	41.7			4.1	%	39.2			4.2	%	120.4			4.2	%
Consolidated EBITDA	$	192.8		19.7	%	$	188.4		18.8	%	$	158.5		17.3	%	$	539.7		18.7	%
Adjustments:
Impairment, restructuring and reorganization charges ⁽¹⁾	—			—	%	2.2			0.2	%	2.3			0.3	%	4.5			0.2	%
Property loss and related expenses ⁽²⁾	6.0			0.6	%	(0.2		)	—	%	0.7			0.1	%	6.5			0.2	%
Acquisition-related charges ⁽³⁾	4.8			0.5	%	3.1			0.3	%	2.9			0.3	%	10.8			0.4	%
Brazil legal matter ⁽⁴⁾	—			—	%	3.3			0.4	%	—			—	%	3.3			0.1	%
Gain on sale of real estate ⁽⁵⁾	(1.7		)	(0.2	)%	—			—	%	—			—	%	(1.7		)	(0.1	)%
Corporate pension and other postretirement benefit related charges ⁽⁶⁾	—			—	%	—			—	%	16.9			1.8	%	16.9			0.6	%
Tax indemnification and related items	0.5			0.1	%	—			—	%	—			—	%	0.5			—	%
Total Adjustments	9.6			1.0	%	8.4			0.9	%	22.8			2.5	%	40.8			1.4	%
Adjusted EBITDA	$	202.4		20.7	%	$	196.8		19.7	%	$	181.3		19.8	%	$	580.5		20.1	%

⁽¹⁾Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants and (iii) severance related to cost reduction initiatives. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.

⁽²⁾ Represents property loss and related expenses during the year (net of insurance proceeds) resulting from property loss that occurred during the first quarter of 2019 at one of the Company's warehouses in Knoxville, Tennessee and during the third quarter of 2019 at one of the Company's warehouses in Yantai, China.

⁽³⁾Acquisition-related charges in 2019 primarily related to the Rollon S.p.A. ("Rollon"), The Diamond Chain Company ("Diamond Chain"), and BEKA Lubrication ("BEKA") acquisitions, including transaction costs and inventory step-up impact.

⁽⁴⁾The Brazil legal matter represents expense recorded to establish a liability associated with an investigation into alleged antitrust violations in the bearing industry that was initiated in October 2014. Refer to the Contingencies footnote within the third quarter 2019 Form 10-Q for additional discussion.

⁽⁵⁾ The gain on sale of real estate related to the sale of a manufacturing facility in Pulaski, Tennessee during the first quarter of 2019. This amount was recorded in other income.

⁽⁶⁾ Corporate pension and other postretirement benefit related charges primarily represent actuarial (gains) and losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions. The Company recognizes actuarial (gains) and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement.



Reconciliation of EBITDA to GAAP Net Income, EBITDA Margin, After Adjustments, to Net Income as a Percentage of Sales, EBITDA, After Adjustments, to Net Income:
(Unaudited)
The following reconciliation is provided as additional relevant information about the Company's performance deemed useful to investors. Management believes consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP measure that is useful to investors as it is representative of the Company's performance and that it is appropriate to compare GAAP net income to consolidated EBITDA. Management also believes that the non-GAAP measures of adjusted EBITDA and adjusted EBITDA margin are useful to investors as they are representative of the Company's core operations and are used in the management of the business, including decisions concerning the allocation of resources and assessment of performance.

	Twelve Months Ended December 31, 2017			Percentage to Net Sales		Twelve Months Ended December 31, 2016 (MTM) ⁽¹⁾			Percentage to Net Sales		Twelve Months Ended December 31, 2016 (As Originally Reported)⁽²⁾			Percentage to Net Sales		Twelve Months Ended December 31, 2015 (MTM) ⁽¹⁾			Percentage to Net Sales		Twelve Months Ended December 31, 2015 (As Originally Reported)⁽²⁾			Percentage to Net Sales
(Dollars in millions)
Net Sales	$	3,003.8				$	2,669.8				$	2,669.8				$	2,872.3				$	2,872.3

Net Income	$	202.3		6.7	%	$	141.1		5.3	%	$	152.9		5.7	%	$	191.4		6.7	%	$	(68.0	)	(2.4	)%
Provision for income taxes	57.6			1.9	%	60.5			2.3	%	69.2			2.6	%	26.3			0.8	%	(121.6		)	(4.3	)%
Interest expense, net	34.2			1.2	%	31.6			1.2	%	31.6			1.2	%	30.7			1.1	%	30.7			1.1	%
Depreciation and amortization	137.7			4.6	%	131.7			4.9	%	131.7			4.9	%	130.8			4.6	%	130.8			4.6	%
Consolidated EBITDA	$	431.8		14.4	%	$	364.9		13.7	%	$	385.4		14.4	%	$	379.2		13.2	%	$	(28.1	)	(1.0	)%
Adjustments:
CDSOA income, net of expense⁽³⁾	—			—	%	(59.6		)	(2.3	)%	(59.6		)	(2.3	)%	—			—	%	—			—	%
Impairment, restructuring and reorganization charges ⁽⁴⁾	11.2			0.3	%	26.5			1.0	%	26.5			1.0	%	15.3			0.5	%	15.3			0.5	%
Health care plan modification costs	(0.7		)	—	%	2.9			0.1	%	2.9			0.1	%	—			—	%	—			—	%
Acquisition-related charges ⁽⁵⁾	9.0			0.3	%	4.2			0.2	%	4.2			0.2	%	5.7			0.2	%	5.7			0.2	%
(Gain) loss on divestiture and sale of real estate ⁽⁶⁾	(3.6		)	(0.1	)%	(0.5		)	—	%	(0.5		)	—	%	(28.7		)	(1.0	)%	(28.7		)	(1.0	)%
Corporate pension and other postretirement benefit related charges ⁽⁷⁾	18.1			0.6	%	67.0			2.5	%	28.1			1.1	%	100.0			3.5	%	465.0			16.2	%
Tax indemnification and related items	(1.0		)	—	%	—			—	%	—			—	%	—			—	%	—			—	%
Fixed asset write-off	—			—	%	—			—	%	—			—	%	9.7			0.4	%	9.7			0.4	%
Total Adjustments	33.0			1.1	%	40.5			1.5	%	1.6			0.1	%	102.0			3.6	%	467.0			16.3	%
Adjusted EBITDA	$	464.8		15.5	%	$	405.4		15.2	%	$	387.0		14.5	%	$	481.2		16.8	%	$	438.9		15.3	%

⁽¹⁾These 2015 and 2016 results are depicted to incorporate the financial impact if mark-to-market accounting was adopted in that respective year (as revised in the Company's 2017 Form 10-K).

⁽²⁾ These 2015 and 2016 results are as originally reported in the respective year (prior to the adoption of mark-to-market accounting).

⁽³⁾U.S. Continued Dumping Subsidy Offset Act ("CDSOA") income represents the amount of funds received by the Company from monies collected by U.S. Customs and Border Protection on merchandise subject to anti-dumping orders that entered the U.S. prior to October 1, 2007.

⁽⁴⁾Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants, and (iii) severance related to cost reduction initiatives. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.

⁽⁵⁾Acquisition-related charges represent transaction costs and the inventory step-up impact of acquisitions.

⁽⁶⁾ Includes gain on the sale of Timken Alcor Aerospace Technologies, Inc ("Alcor") of $29.0 million in the fourth quarter of 2015.

⁽⁷⁾ Corporate pension and other postretirement benefit related charges primarily represent actuarial (gains) and losses that resulted from the remeasurement of plan assets and obligations as a result of changes in assumptions. The Company recognizes actuarial (gains) and losses in connection with the annual remeasurement in the fourth quarter, or if specific events trigger a remeasurement.



Reconciliation of segment EBITDA Margin, After Adjustments, to segment EBITDA as a Percentage of Sales and segment EBITDA, After Adjustments, to segment EBITDA:
(Unaudited)
The following reconciliation is provided as additional relevant information about the Company's Mobile Industries and Process Industries segment performance deemed useful to investors. Management believes that the non-GAAP measures of adjusted EBITDA and adjusted EBITDA margin for the segments are useful to investors as they are representative of each segment's core operations and are used in the management of the business, including decisions concerning the allocation of resources and assessment of performance.

Mobile Industries
	Three Months Ended March 31, 2019			Percentage to Net Sales		Three Months Ended June 30, 2019			Percentage to Net Sales		Three Months Ended September 30, 2019		Percentage to Net Sales		Nine Months Ended September 30, 2019			Percentage to Net Sales
(Dollars in millions)
Net sales	$	500.0				$	493.7				$	455.1			$	1,448.8
Earnings before interest, taxes, depreciation and amortization (EBITDA)	$	79.3		15.9	%	$	78.0		15.8	%	$	70.1	15.4	%	$	227.4		15.7	%
Impairment, restructuring and reorganization charges ⁽¹⁾	0.3			—	%	0.7			0.1	%	1.1		0.2	%	2.1			0.1	%
Gain on sale of real estate ⁽²⁾	(1.7		)	(0.3	)%	—			—	%	—		—	%	(1.7		)	(0.1	)%
Property loss and related expenses ⁽³⁾	6.0			1.2	%	(0.2		)	—	%	0.7		0.2	%	6.5			0.5	%
Acquisition-related charges ⁽⁴⁾	—			—	%	0.1			—	%	—		—	%	0.1			—	%
Adjusted EBITDA	$	83.9		16.8	%	$	78.6		15.9	%	$	71.9	15.8	%	$	234.4		16.2	%

Process Industries
	Three Months Ended March 31, 2019			Percentage to Net Sales		Three Months Ended June 30, 2019			Percentage to Net Sales		Three Months Ended September 30, 2019		Percentage to Net Sales		Nine Months Ended September 30, 2019			Percentage to Net Sales
(Dollars in millions)
Net sales	$	479.7				$	506.3				$	458.9			$	1,444.9
Earnings before interest, taxes, depreciation and amortization (EBITDA)	$	127.6		26.6	%	$	125.7		24.8	%	$	116.5	25.4	%	$	369.8		25.6	%
Impairment, restructuring and reorganization charges ⁽¹⁾	(0.3		)	(0.1	)%	1.5			0.3	%	1.2		0.3	%	2.4			0.2	%
Acquisition-related charges ⁽⁴⁾	3.9			0.8	%	2.5			0.5	%	1.5		0.3	%	7.9			0.5	%
Adjusted EBITDA	$	131.2		27.4	%	$	129.7		25.6	%	$	119.2	26.0	%	$	380.1		26.3	%

⁽¹⁾Impairment, restructuring and reorganization charges (including items recorded in cost of products sold) relate to: (i) plant closures; (ii) the rationalization of certain plants and (iii) severance related to cost reduction initiatives. The Company re-assesses its operating footprint and cost structure periodically, and makes adjustments as needed that result in restructuring charges. However, management believes these actions are not representative of the Company’s core operations.

⁽²⁾ The gain on sale of real estate related to the sale of a manufacturing facility in Pulaski, Tennessee during the first quarter of 2019. This amount was recorded in other income.

⁽³⁾ Represents property loss and related expenses during the year (net of insurance proceeds) resulting from property loss that occurred during the first quarter of 2019 at one of the Company's warehouses in Knoxville, Tennessee and during the third quarter of 2019 at one of the Company's warehouses in Yantai, China.

⁽⁴⁾ Acquisition-related charges in 2019 primarily related to the inventory step-up impact for the Rollon and Diamond Chain acquisitions.