Timken Company (TKR) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales were $1.13 billion, down 1.4% year-over-year, mainly due to lower demand in Europe and China, partially offset by acquisitions and positive pricing.

• Adjusted EBITDA margin was 16.9%, down from 18.9% last year, with adjusted EPS at $1.23, a 21% decrease, both below expectations due to lower volumes and higher logistics costs.

• Net income was $81.8 million ($1.16 per diluted share GAAP), down 6.9% year-over-year.

• Free cash flow for the quarter was $88 million; net debt-to-adjusted EBITDA ratio stood at 2.1x.

• CEO transition: Tarak Mehta appointed CEO in September 2024, succeeding Richard G. Kyle.

Financial highlights

• Adjusted EBITDA was $190 million (16.9% margin), down from $216 million (18.9%) last year.

• Adjusted EPS was $1.23, down from $1.55 last year; net income margin was 7.3%.

• Free cash flow for Q3 was $88 million after $35 million in CapEx.

• Net debt at September 30, 2024 was $1.83 billion, with net debt to adjusted EBITDA at 2.1x.

• Paid 409th consecutive quarterly dividend ($0.34/share) in Q3 2024.

Outlook and guidance

• Full-year 2024 revenue expected to decline ~4% versus 2023, with organic sales down ~6%.

• Adjusted EPS guidance lowered to $5.55–$5.65; full-year adjusted EBITDA margin expected in the low 18% range.

• Free cash flow outlook reduced to ~$300 million for 2024, with over $100 million expected in Q4.

• Fourth quarter expected to see a more pronounced seasonal slowdown and continued margin pressure.

• Capital expenditures for FY 2024 expected to be less than 4% of sales.