Timken Company (the) · NYSE:TKR
Timken Company (the) — Bank of America Merrill Lynch Investor Conference 2015
24 slides from Timken Company (the)'s conference presentation, Mar 16, 2015
Slide 1: Bank of America Merrill Lynch Investor Conference
Exhibit 99.1 Bank of America Merrill Lynch Investor Conference March 17, 2015 • London
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 A Leader in Bearings, Power Transmission and Related Services Ticker NYSE: TKR Legacy c. 1899; 115 years of operations 2014 Sales $3.1B Employees 16,000 worldwide Global Footprint Headquarters in North Canton, OH 28 countries 62 manufacturing facilities Dividend Payout every quart
Slide 5: Timken Transformation
TIMKEN TRANSFORMATION The Timken Transformation 2007 - 2014 Timken Improved Financial Performance 2007 5-Year Average 2004 – 2008 2010 – 2014 • Exited automotive business that did not meet value proposition criteria Sales: $3.7B $3.1B EBIT Margin (Adj.): 5.0% 12.6% – $1B exited and business restruct
Slide 6: Attractive Business Profile
ATTRACTIVE BUSINESS PROFILE End-Market Sectors Product Offering Channel Overview Power Transmission 19% 15% Products Aftermarket OEM Services (New Equipment Builds) Bearings OEM (Aftermarket Parts) • Highly diverse end- • Expanding beyond • Large installed base market sectors, customer tapered rolle
Slide 7: The Timken Business Model
THE TIMKEN BUSINESS MODEL Growth Markets Driven Challenging by Strong Macros Technology & Applications Know How Aftermarket Business & Rebuild Capabilities Value Creation Operational Fragmentation Excellence High Service Talent Requirements Expand Global Reach with Adjacent Products & Services 7
Slide 8: The Growth Plan: What You Can Expect
THE GROWTH PLAN: WHAT YOU CAN EXPECT Capture Share 1. and Apply Timken Business Model Market Growth Grow International Sales and 2. Win Globally Focus on Emerging Markets Leverage 3. Technology and Accelerate Product Development Rate Know-How to Grow Organically Pursue Strategic, Focus on: 4. Bolt-o
Slide 9: Bearing Housed Unit Portfolio Transformation
BEARING HOUSED UNIT PORTFOLIO TRANSFORMATION BUILDING FOR GROWTH UC Series Ball Bearing Split roller housed Type E Ball bearing units housed units SNT Plummer Spherical roller bearing steel housed unit Feb February July February July November 2003 2010 2010 2013 2014 2014 • Housed bearing units prov
Slide 10: 2014 Actions Drive Strong Performance & Opportunity
2014 ACTIONS DRIVE STRONG PERFORMANCE & OPPORTUNITY • Successful organization in place and TimkenSteel spin completed • 2014 earnings growth (adj. EPS) of 23% on modest top line growth • Launched multiple growth opportunities & margin enhancement initiatives – DeltaX – Disciplined and strategic M&A
Slide 11: Financial Review
Stronger. Financial Review
Slide 12: 2014 Financial Accomplishments
2014 FINANCIAL ACCOMPLISHMENTS Revenue Adj. EBIT Margin Adj. EPS ($ 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 (% of sales) vs. $3.0 $3.1 10.8% 12.2% $2.07 $2.55 2013 • Adjusted ROIC of 11.5%, up from 9.7% in 201
Slide 13: Balance Sheet and Leverage
BALANCE SHEET AND LEVERAGE Balance Sheet (12/31/14) ($ Millions) Net Debt / Capital Capital Structure ($ Millions) Net Debt Net Debt/ Capital Target: Cash $294 30 – 40% Debt 530 Net Debt 236 Equity 1,589 Net Capital $1,825 13% 9% Leverage 2% Total Debt/Capital 25% Net Debt/Capital 13% Executing Plan
Slide 14: Impact of Currency on 2015 Outlook
IMPACT OF CURRENCY ON 2015 OUTLOOK Over 45% of Timken 2014 revenue was generated outside the United States: Currency Impact on 2015 (vs. 2014): January 1 March 13 US dollar index (DXY) 90.3 100.2 USD/EUR 1.21 1.05 Est. full year revenue impact down 3%* down 6% Appreciation in US dollar since year-en
Slide 15: Investment Summary – Why Own Timken
INVESTMENT SUMMARY – WHY OWN TIMKEN Timken is a Compelling Investment… • Differentiated Business Model delivers strong financial results – Fragmented, diverse end-markets and customers – Attractive mix – Global growth opportunity • Strong, results oriented Management Team • Shifted focus from transf
Slide 16: Bank of America Merrill Lynch Investor Conference
* * * * Bank of America Merrill Lynch Investor Conference March 17, 2015 • London
Slide 17: Appendix
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Slide 18: GAAP Reconciliation: 2004 – 2014
GAAP RECONCILIATION : 2004 – 2014 Reconciliation of Sales, EBIT to Net Income, EBIT After Adjustments to Net Income , EBIT as a Percentage of Sales and EBIT After Adjustments as a Percentage of Sales; all excluding the Steel Business: The following reconciliation is provided as additional relevant i
Slide 19: 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 th
Slide 20: 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. Mana
Slide 21: GAAP Reconciliation: Adjusted ROIC
GAAP RECONCILIATION: ADJUSTED ROIC Reconciliation of Adjusted Return on Invested Capital (ROIC): The following reconciliation is provided as additional relevant information about the Company's performance. Management believes that ROIC, after adjustments, is representative of financial return of the
Slide 22: 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
Slide 23: GAAP Reconciliation: Pro Forma EPS
GAAP RECONCILIATION: PRO FORMA EPS Reconciliation of Earnings Per Share and Earnings Per Share After Adjustments to Net Income; excluding the Steel Business: The following reconciliation is provided as additional relevant information about the Company's performance. Management believes that earnings
Slide 24: GAAP Reconciliation: Segment Adjusted EBIT
GAAP RECONCILIATION: SEGMENT ADJUSTED EBIT Reconciliation of EBIT After Adjustments and EBIT as a Percentage of Sales: The following reconciliation is provided as additional relevant information about the Company's performance. Management believes that EBIT and EBIT margin, after adjustments, are re
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