Slide 1: 1Q 2015 Earnings Investor Presentation
1Q 2015 Earnings Investor Presentation April 30, 2015 Exhibit 99.2
Slide 2: Earnings Call Detail
EARNINGS CALL DETAIL Timken 1Q 2015 Earnings Conference Call Conference Call: Thursday, April 30, 2015 11:00 a.m. Eastern Time Live Dial-In: 888-778-9065 or 913-312-1503 (Call in 10 minutes prior to be included.) Conference ID: Timken Earnings Call Conference Call Replay: Replay Dial-In available th
Slide 3: Forward-Looking Statements Safe Harbor and Non-GAAP Financial Information
FORWARD-LOOKING STATEMENTS SAFE HARBOR AND NON-GAAP FINANCIAL INFORMATION 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
Slide 4: Agenda
AGENDA ● Overview & Business Update Rich Kyle – President and CEO ● Financial Review Phil Fracassa – Executive Vice President and CFO ● Question/Answer 4
Slide 5: 1Q 2015 Highlights
1Q 2015 HIGHLIGHTS ● Sales of $723 million down 2% from prior year, up 3% excluding currency of 5% ‒ Process Industries up 5%; up 9% excluding negative currency of 4% ‒ Mobile Industries sales down 7%; 4.5% of decline related to currency ● Net loss per share of $(1.54) versus net income of $0.64 in
Slide 6: Improving Cost Structure – SG&A
6 IMPROVING COST STRUCTURE – SG&A Steadily Reducing Expense While Investing For Growth $141.8 $136.8 $132.2 $131.7 $128.5 $120 $125 $130 $135 $140 $145 1Q-2014 2Q-2014 3Q-2014 4Q-2014 1Q -2015 ($ Mils.) $13.3 Mils. Cost Improvement Percent of Sales 19.2% 17.3% 16.8% 17.3% 17.8%
Slide 7: 2015 Outlook Update
2015 OUTLOOK UPDATE January Outlook April Outlook Change Reflects Sales $3.1 Bil. $3.0 Bil. Markets / Penetration + 4% + 1% • Flat markets with modest outgrowth Currency - 3% - 5% • Impact of stronger US dollar Total + 1% - 4% Earnings (EPS) $2.65- $2.75 $2.30-$2.40 Currency Impact $(0.15) $(0.35) E
Slide 8: Outgrowth Initiatives
8 OUTGROWTH INITIATIVES Hub Bearings: Launching new hub bearing for automotive OE Timken Power Systems: New high-speed gear drive manufacturing facility in Houston Housed Units: Introduced at Hannover Fair our newest housed unit bearing line, which includes Revolvo products Spherical Roller Bearings
Slide 9: Our Focus
OUR FOCUS 9 ● Adjust to the strong dollar environment ● Remain flexible to respond to the market environment ● Drive margin enhancement/competitiveness initiatives - Operational excellence - Mix - SG&A efficiency ● Continue to build our pipeline of outgrowth initiatives ● Capital Allocation
Slide 10: Financial Review
Stronger. Financial Review
Slide 11: 1Q 2015 Financial Highlights – Sales
● Sales of $723 million, down 2% from a year ago ‒ Growth of 2.5% driven by wind energy, military marine and rail sectors, and the benefit of acquisitions ‒ More than offset by negative currency of 4.5% 1Q 2015 FINANCIAL HIGHLIGHTS – SALES 1Q ’15 1Q ’14 $722.5 $736.8 $ B/(W) Sales % B/(W) $(14.3) (2
Slide 12: 1Q 2015 Financial Highlights – EBIT
1Q 2015 FINANCIAL HIGHLIGHTS – EBIT 1Q ’15 1Q ’14 $722.5 $736.8 $ B/(W) Sales % B/(W) $(14.3) (2)% 202.5 218.1 Gross Profit 128.5 141.8 SG&A 3.2 Impairment & restructuring $92.8 EBIT ($ Millions) % of sales 17.8% 19.2% % of sales 28.0% 29.6% (160) bps 140 bps Note: See Appendix for reconciliation of
Slide 13: 1Q 2015 Financial Highlights – Adj. EBIT
1Q 2015 FINANCIAL HIGHLIGHTS – ADJ. EBIT Note: See Appendix for reconciliation of EBIT, adjusted EBIT, and EBIT and adjusted EBIT margin to their most directly comparable GAAP equivalents. Adjustments: $73.0 $75.1 EBIT after adjustments $(2.1) (3)% 10.1% 10.2% EBIT Margins (10) bps 6.6 - Impairment
Slide 14: 1Q 2015 Earnings Comparison
1Q 2015 EARNINGS COMPARISON ● Adjusted EBIT of $73 million or 10.1% of sales compares with $75 million or 10.2% of sales in the same period a year ago ‒ Negative currency and unfavorable mix more than offset the benefit of higher volume and lower SG&A expenses 1Q 2014 Volume / Mix Currency SG&A / Ot
Slide 15: 1Q 2015 Net Income and Diluted EPS
1Q 2015 NET INCOME AND DILUTED EPS 1Q ’15 $(135.2) $(1.54) Net (Loss) Income - (Benefit) provision for income taxes Net Income, after adjustments $44.2 $0.50 $ in Millions EPS (42.4) 1Q ’14 $60.0 $0.64 $47.0 $0.50 $ in Millions EPS 4.7 Adjusted tax rate: Quarter 32% 34% - Impairment and restructurin
Slide 16: Mobile Industries
MOBILE INDUSTRIES Heavy Truck Light Vehicle Aerospace Rail ($ Millions) 2015 2014 Change Sales $393.0 $421.7 $(28.7) EBIT $35.4 $64.3 $(28.9) Margin 9.0% 15.2% (620) bps Adjusted(1): EBIT $36.4 $45.3 $(8.9) Margin 9.3% 10.7% (140) bps 1Q YOY Commentary 1Q Performance • Sales decrease of 6.8% driven
Slide 17: Process Industries
PROCESS INDUSTRIES ($ Millions) 2015 2014 Change Sales $329.5 $315.1 $14.4 EBIT $45.2 $48.2 $(3.0) Margin 13.7% 15.3% (160) bps Adjusted(1): EBIT $50.8 $49.3 $1.5 Margin 15.4% 15.6% (20) bps 1Q YOY Commentary 1Q Performance • Sales increase of 4.6% due to market growth in wind energy and military ma
Slide 18: 1Q 2015 Cash Flow Overview
1Q 2015 CASH FLOW OVERVIEW 1Q ’15 1Q ’14 $(134.8) $60.3 Income from Continuing Operations $17.0 $(1.3) Cash from operations (25.6) (14.5) Change in working capital (trade) (29.7) 11.1 Income taxes 33.5 (8.1) Depreciation & Amortization $(2.7) $(20.4) Free cash flow 218.2 Pension/OPEB expense, net of
Slide 19: Capital Allocation
CAPITAL ALLOCATION Capital Structure Cash $169 Debt 523 Net Debt 354 Equity 1,416 Net Capital $1,770 Leverage Total Debt/Capital 27% Net Debt/Capital 20% ($ Millions) Balance Sheet (3/31/15) Target: 30 – 40% Net Debt Net Debt/ Capital $46 $236 $354 0% 10% 20% 30% 40% $0 $200 $400 $600 $800 2013 2014
Slide 20: 2015 Full-Year Outlook
2015 FULL-YEAR OUTLOOK ● Sales: down approximately 4% ‒ Negative currency of 5% ‒ Growth of 1%, driven by light vehicle, wind energy and rail, partially offset by aerospace and agriculture ● GAAP EPS estimate: $0.60 to $0.70 per diluted share ● Adjusted EPS Estimate of $2.30 to $2.40 per diluted sha
Slide 21: 2015 Adj. EPS Outlook – Walk from 2014
2015 ADJ. EPS OUTLOOK – WALK FROM 2014 21 2015 Adjusted EPS Guidance Range: $2.30 - $2.40 Positives ● Organic sales growth of ~1%, with favorable cost (net) ● Share repurchases completed in 2014 ($0.05) and 1Q-2015 ($0.05) ● Tax rate improvement to 32% Negatives ● Currency ● Other items including: -
Slide 22: Appendix
Appendix
Slide 23: GAAP Reconciliation: Consolidated EBIT & EBIT Margin
GAAP RECONCILIATION: CONSOLIDATED EBIT & EBIT MARGIN 23 (Dollars in millions, except share data) (Unaudited) 2015 Percentage to Net Sales 2014 Percentage to Net Sales Net (Loss) Income (134.8)$ (18.7)% 83.8$ 11.4 % Income From Discontinued Operations, net of income taxes — —% (23.5) (3.2)% (Benefit)
Slide 24: GAAP Reconciliation: Segment EBIT & EBIT Margin
GAAP RECONCILIATION: SEGMENT EBIT & EBIT MARGIN 24 Mobile Industries (Dollars in millions) (Unaudited) Three Months Ended March 31, 2015 Percentage to Net Sales Three Months Ended March 31, 2014 Percentage to Net Sales Earnings before interest and taxes (EBIT) 35.4$ 9.0% 64.3$ 15.2% Pension settleme
Slide 25: GAAP Reconciliation: Net Income & EPS
GAAP RECONCILIATION: NET INCOME & EPS 25 (Dollars in millions, except share data) (Unaudited) 2015 EPS 2014 EPS (Loss) Income from Continuing Operations (134.8)$ 60.3$ Less: Net Income Attributable to Noncontrolling Interest 0.4 0.3 Net (Loss) Income from Continuing Operations (135.2)$ (1.54)$ 60.0$
Slide 26: GAAP Reconciliation: Net Debt & Free Cash Flow
GAAP RECONCILIATION: NET DEBT & FREE CASH FLOW 26 (Dollars in millions) (Unaudited) March 31, 2015 December 31, 2014 December 31, 2013 Short-term debt 3.7$ 8.0$ 269.3$ Long-term debt 519.7 522.1 176.4 Total Debt 523.4$ 530.1$ 445.7$ Less: Cash, cash equivalents and restricted cash (169.2) (294.1) (3