Timken Company (the) · NYSE:TKR
Timken Company (the) — The Timken Company — Deutsche Bank Global Industrials and Basic Materials Investor Conference 2015
25 slides from Timken Company (the)'s conference presentation, Jun 3, 2015
Slide 1: Deutsche Bank Global Industrials and Basic Materials Investor Conference
Deutsche Bank Global Industrials and Basic Materials Investor Conference June 3, 2015 • Chicago
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation (including statements regarding the company's forecasts, beliefs, estimates and expectations) that are not historical in nature are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 19
Slide 3: Company Overview and Direction
Company Overview and Direction
Slide 4: Timken at a Glance
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 A Leader in Bearings, Power Transmission and Related Services 4
Slide 5: An Attractive Business Profile
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% Defense 7% Agriculture 6% 49% 51% Industrial Services 5% Metals 5% Mining 5%
Slide 6: The Timken Business Model
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 Capabilities Value Timken Creation Operational Fragmentation Excellence High Serv
Slide 7: The Growth Plan: What You Can Expect
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 Development Rate Know How to Grow Organically Pursue Strategic, Focus on: 4. Bolt-on Be
Slide 8: Capture Share and Market Growth: Apply Timken Business Model
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 Harsh environments Reliability System Energy efficiency Urbanization Infra
Slide 9: Win Globally: A Growing International Footprint
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 Thailand Vietnam 17% Singapore Brazil Indonesia Australia Plants/Service Centers |
Slide 10: Leverage Technology and Know How to Grow Organically
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: Leverage TRB position and organic / Billion Billio inorganic tactics
Slide 11: Bearing Housed Unit Portfolio Transformation
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 housed unit Feb February July February July November 2003 2010 2010 2013 2
Slide 12: Pursue Strategic Bolt-On Acquisitions
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 Mechanical monitoring, rebuild and repair services Power Transmissio
Slide 13: Portfolio Transformation – Building for Growth
Portfolio Transformation – Building for Growth Sales: $30M Electric motor repair, related Sales: $18M services and up- Electric motor repair Sales: $17M and related services Sales: $85M tower wind Electric motor repair Industrial gear maintenance and related services drive and repair and repair serv
Slide 14: 2014 Financial Accomplishments
2014 Financial Accomplishments Revenue Adj. EBIT Margin Adj. EPS ($ in Billions) Other Highlights Up 1% Up 140 bps Up 23% • Process Industries sales up 10.4% vs. 2013 • SG&A expense improved 40 bps $3.0 $3.1 10.8% 12.2% $2.07 $2.55 (% of sales) vs. 2013 • Adjusted ROIC of 11.5%, up from 9.7% in 2013
Slide 15: Capital Allocation Priorities
Capital Allocation Priorities Disciplined Approach to Drive Shareholder Value Capital Expenditures Organic Growth and Margin Improvement CapEx: ~4% of Sales Dividend Target: 25 – 35% Payout Ratio Acquisitions Share Repurchases Target Accretive Bolt-on Transactions Buybacks to Enhance Shareholder Val
Slide 16: Balance Sheet and Leverage
Balance Sheet and Leverage Balance Sheet (3/31/15) ($ Millions) Net Debt/Capital Capital Structure ($ Millions) Net Debt Net Debt/ Capital $800 40% Cash $169 Target: 30 – 40% Debt 523 $600 30% Net Debt 354 20% $400 20% Equity 1,416 13% Net Capital $1,770 $200 $354 10% Leverage 2% $236 $0 $46 0% Tota
Slide 17: M&A Strategy
M&A Strategy Our Objectives: • Pursue a pipeline of strategic targets; 2010 – 2014 emphasis on bolt-ons • Focus on bearings, adjacent power Total Total Sales transmission products and industrial # of Deals Spent Acquired services 9 ~$400M ~$300M • M&A to expand capabilities – Product/services offeri
Slide 18: Investment Summary – Why Own Timken
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 management team • Shifted focus from transformation to: ‒ Profi
Slide 19: Deutsche Bank Global Industrials and Basic Materials Investor Conference
Deutsche Bank Global Industrials and Basic Materials Investor Conference June 3, 2015 • Chicago
Slide 20: Appendix
Appendix 20
Slide 21: GAAP Reconciliation: Sales Excluding Planned Program Exits & Currency Effects
GAAP Reconciliation: Sales Excluding Planned Program Exits & Currency Effects Reconciliation of Net Sales After Planned Program Exits and Currency Effects to Net Sales The following reconciliation is provided as additional relevant information about the Company's performance. Management believes tha
Slide 22: GAAP Reconciliation: Consolidated EBIT & EBIT Margin
GAAP Reconciliation: Consolidated EBIT & EBIT Margin Reconciliation of EBIT Margin, After Adjustments, to Net Income as a Percentage of Sales and EBIT, After Adjustments, to Net Income: The following reconciliation is provided as additional relevant information about the Company's performance. Manag
Slide 23: GAAP Reconciliation: EPS
GAAP Reconciliation: EPS Reconciliation of Earnings Per Share and Earnings Per Share After Adjustments to Net Income; excluding the Steel Business: The following reconciliation provides additional relevant information about the Company's performance. Management believes that earnings per share (EPS)
Slide 24: GAAP Reconciliation: Adjusted ROIC
GAAP Reconciliation: Adjusted ROIC Reconciliation of Adjusted Return on Invested Capital (ROIC): The following reconciliation provides additional relevant information about the Company's performance. Management believes that ROIC, after adjustments, is representative of financial return of the Compa
Slide 25: GAAP Reconciliation: Net Debt/Capital
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, used for the ratio of total debt to capital, is defined as total de