The Timken Company TKR reported adjusted earnings per share (EPS) of $1.37 in fourth-quarter 2023, beating the Zacks Consensus Estimate of $1.23 per share. The bottom line grew 2% year over year.

On a reported basis, the company delivered earnings of 83 cents per share in the quarter under review compared with $1.32 in the prior-year quarter.

Total revenues in the quarter were $1.09 billion, up 0.8% from the year-ago quarter. The upside can be attributed to the benefit of acquisitions, higher pricing and favorable foreign currency translation, partly offset by lower volume. The top line beat the Zacks Consensus Estimate of $1.06 million.

Timken Company (The) Price, Consensus and EPS Surprise

Timken Company (The) price-consensus-eps-surprise-chart | Timken Company (The) Quote

Costs and Margins

Cost of sales fell 1.8% to $760 million from the prior-year quarter. Gross profit increased 7.6% year over year to $331 million. The gross margin was 30.3% compared with 28.4% a year ago.

Selling, general and administrative expenses rose 13.3% year over year to $190 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 5.1% year over year to $195 million. The adjusted EBITDA margin in the quarter was 17.9% compared with 17.2% in the prior-year quarter.

Segmental Performances

The Engineered Bearings segment’s revenues declined 2.4% year over year to $724 million. The decrease was mainly due to lower volumes. These were somewhat offset by higher pricing and the benefits of acquisitions. We expected the segment’s sales to be $710 million in the quarter.

The Engineered Bearings segment’s adjusted EBITDA was $132.5 million compared with the year-ago quarter’s $134.2 million. Our prediction for the segment’s adjusted EBITDA was $129.9 million. The impacts of lower volume, higher manufacturing costs, unfavorable foreign currency, and higher impairment and restructuring charges were partially offset by lower material and logistics costs, and a favorable price/mix.

The Industrial Motion segment’s revenues rose 8% year over year to $367 million in fourth-quarter 2023. The upside was led by higher pricing, the benefits of acquisitions and a favorable currency translation, partially offset by lower volume. The reported figure surpassed our estimate of $343 million. The segment’s adjusted EBITDA was $81.6 million in the fourth quarter of 2023 compared with $64.9 million in the fourth quarter of 2022. We projected an adjusted EBITDA of $61 million for the third quarter of 2023.

Financial Position

Timken had cash and cash equivalents of $419 million at the end of 2023, up from $332 million at the end of 2022. Cash flow from operating activities was $545 million in 2023 compared with $464 million in the prior year.

In the fourth quarter, Timken returned $55.7 million in cash to shareholders through dividends and share repurchases.