Slide 1: 4Q 2014 Earnings Investor Presentation
Exhibit 99.2 4Q 2014 Earnings Investor Presentation January 29, 2015
Slide 2: Earnings Call Detail
EARNINGS CALL DETAIL Timken 4Q 2014 Earnings Conference Call Conference Call: Thursday, Jan. 29, 2015 11:00 a.m. Eastern Time Live Dial-In: 888-211-4542 or 816-581-1736 (Call in 10 minutes prior to be included.) Conference ID: Timken Earnings Call Conference Call Replay: Replay Dial-In available thr
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: 4Q 2014 Highlights
4Q 2014 HIGHLIGHTS Sales of $762 million, up 2% from prior-year 4Q despite strong dollar Sales increase 12% in Process Industries Mobile Industries sales down 7%; more than half of decline related to planned program exits Net income per diluted share of $0.43 versus $0.35 in same quarter last year 4
Slide 6: Revolvo Ltd. Acquisition
REVOLVO LTD. ACQUISITION Strong Strategic Fit Strengthens Timken bearing offering in the global housed unit market sector with addition of split roller housed units and precision products Core industrial market sectors include: metals, mining, pulp and paper, food and beverage, power generation, cem
Slide 7: 2014 Positions Timken For Growth
2014 POSITIONS TIMKEN FOR GROWTH Completed Spinoff of TimkenSteel mid-year Launched DeltaX, a multi-year initiative to accelerate product development and line expansion efforts, enhancing the Timken collaborative technical sales model Achieved several key business wins across market sectors includin
Slide 8: 2014 Outgrowth Initiatives
2014 OUTGROWTH INITIATIVES Expanded line of Timken housed unit bearings Invested with new part in new numbers and technologies designs to advance high-speed gear sales. New and improved designs revitalize Timken spherical thrust bearings Extended line of Timken spherical and cylindrical bearings Enh
Slide 9: 2015 Market Outlook Drivers
2015 MARKET OUTLOOK DRIVERS Negative Neutral Positive Currency Industrial Machinery Light Vehicle Agriculture Mining / Metals Rail Energy (Oil & Gas) Construction Wind Energy Defense Heavy Truck Aerospace Civil Europe North America Asia Russia Latin America Expected Organic Growth of ~4% Driven by M
Slide 10: 2015 Outlook Highlights
2015 OUTLOOK HIGHLIGHTS 2015 Outlook Sales (Mid-point) $3.1 Billion YOY Change Up 1% (+4% growth, largely offset by currency) GAAP EPS $0.85 to $0.95 Adjusted EPS $2.65 to $2.75 Adj. EPS YOY Change (Mid-point) Up 6% Adj. EBIT Margin 12.5% to 13% Margin Expansion Expected to Help Drive 6% EPS Growth
Slide 11: Financial Review
TIMKEN — Financial Review
Slide 12: 4Q 2014 Financial Highlights – Sales
4Q 2014 FINANCIAL HIGHLIGHTS – SALES ($ Millions) 4Q ’14 4Q ’13 $ B/(W) % B/(W) Sales $762.2 $749.5 $12.7 2% Sales of $762 million, up 2% from a year ago Driven by growth in OE sectors (including wind energy and rail) and the industrial aftermarket, as well as the benefit of acquisitions Partially o
Slide 13: 4Q 2014 Financial Highlights – EBIT
4Q 2014 FINANCIAL HIGHLIGHTS – EBIT ($ Millions) 4Q ’14 4Q ’13 $ B/(W) % B/(W) Sales $762.2 $749.5 $12.7 2% Gross Profit 220.8 207.9 12.9 % of sales 29.0% 27.7% 130 bps SG&A 131.7 134.0 2.3 % of sales 17.3% 17.9% 60 bps Impairment & restructuring 5.4 3.8 Pension settlement charges 33.0 0.5 Other inc
Slide 14: 4Q 2014 Financial Highlights – Adj. EBIT
4Q 2014 FINANCIAL HIGHLIGHTS – ADJ. EBIT ($ Millions) 4Q ’14 4Q ’13 $ B/(W) % B/(W) Sales $762.2 $749.5 $12.7 2% Gross Profit 220.8 207.9 12.9 % of sales 29.0% 27.7% 130 bps SG&A 131.7 134.0 2.3 % of sales 17.3% 17.9% 60 bps Impairment & restructuring 5.4 3.8 Pension settlement charges 33.0 0.5 Othe
Slide 15: 4Q 2014 Earnings Comparison
4Q 2014 EARNINGS COMPARISON Adjusted EBIT of $89 million or 11.7% of sales compares with $76 million or 10.2% of sales in the same period a year ago Driven by volume and lower manufacturing costs, partially offset by currency Adjusted EBIT ($ - Millions) $14 $(6) $1 $89 $76 $4 Note: Certain data con
Slide 16: 4Q 2014 Net Income and Diluted EPS
4Q 2014 NET INCOME AND DILUTED EPS 4Q ’14 4Q ’13 $ in Millions EPS $ in Millions EPS Net Income from Continuing Operations $38.9 $0.43 $33.7 $0.35 - Pension settlement charges 33.0 0.37 0.5 0.01 - Aerospace impairment and restructuring 3.7 0.04 - - - - charges - Charges for cost-reduction initiative
Slide 17: Resegmentation Overview
RESEGMENTATION OVERVIEW Current quarter and prior period financial results have been re-segmented to reflect: Elimination of Aerospace segment; financial results reported primarily in Mobile Industries segment Reallocation of corporate SG&A expense to business segments to better reflect the Company’
Slide 18: Mobile Industries
MOBILE INDUSTRIES 4Q Performance 4Q YOY Commentary ($ Millions) • Sales decrease of 7% driven by light 2014 2013 Change vehicle sector program exits ($15M), Sales $389.5 $418.1 $(28.6) lower aerospace and agriculture demand, and currency, partially offset by growth EBIT $22.4 $38.0 $(15.6) in rail M
Slide 19: Process Industries
PROCESS INDUSTRIES 4Q Performance 4Q YOY Commentary ($ Millions) • Sales increase of 12% due to market 2014 2013 Change growth and share gains in OE sectors Sales $372.7 $331.4 $41.3 (wind energy & marine), the industrial aftermarket, as well as the impact of EBIT $79.7 $50.9 $28.8 acquisitions, par
Slide 20: 2014 Cash Flow Overview
2014 CASH FLOW OVERVIEW ($ Millions) 2014 2013 Income from Continuing Operations $147.0 $175.5 Change in working capital (67.1) 30.9 Pension & OPEB expense 62.0 55.1 Pension & OPEB contributions / payments (49.9) (93.4) Depreciation & Amortization 137.0 142.4 Income taxes (68.6) 34.5 Impairment char
Slide 21: Capital Allocation
CAPITAL ALLOCATION Balance Sheet (12/31/14) ($ 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: 2014 A
Slide 22: Pension Strategy & De-Risking Update
PENSION STRATEGY & DE-RISKING UPDATE Focus on de-risking initiatives to protect fully-funded status, reduce earnings volatility and manage obligations down over time with minimal cash flow impact Pension plans are well-funded, and have been closed to new entrants since 2004 Recent Actions: 1. Shifte
Slide 23: 2015 Full Year Outlook
2015 FULL YEAR OUTLOOK Sales: Up approximately 1% Sales (vs. 2014) Organic Net Driven by organic growth in light vehicle, Growth Currency Sales wind energy, marine and the industrial Mobile Industries +1 to 3% ~(3)% Flat to Down 2% aftermarket, partially offset by declines in agriculture Process Ind
Slide 24: 2015 Adj. EPS Outlook – Walk from 2014
2015 ADJ. EPS OUTLOOK – WALK FROM 2014 2015 Adjusted EPS Guidance Range: $2.65 - $2.75 Positives: $0.35 $(0.15) Core organic sales growth of ~4% with (6)% $2.70 $(0.05) Mid-point of operating leverage and margin expansion +14% $(0.05) $0.05 Guidance from operational excellence initiatives to (2)% (2
Slide 25: Appendix
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Slide 26: 2014 Geographic Sales vs. 2013
2014 GEOGRAPHIC SALES VS. 2013 Sales of $3.1 billion, up 1% year-over-year Currency had a negative impact of 1% EMEA -1% (flat excluding Russia APAC impact of currency) +12% (+14% excluding Canada U.K. Germany impact of currency) Poland NA Czech Republic -2% France Japan (-1% excluding Italy Romania
Slide 27: 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 28: GAAP Reconciliation: Segment EBIT & EBIT Margin
ECONCILIATION: SEGMENT EBIT & EBIT MARGIN Reconciliation of segment EBIT Margin, After Adjustments, to segment EBIT as a Percentage of Sales and segment EBIT, After Adjustments, to segment EBIT: The following reconciliation is provided as additional relevant information about the Company's Mobile In
Slide 29: GAAP Reconciliation: Net Income & EPS
GAAP RECONCILIATION: NET INCOME & EPS Reconciliations of Adjusted Net Income from Continuing Operations and Net Income from Continuing Operations to GAAP Income from Continuing Operations and Adjusted Earnings Per Share to GAAP Earnings Per Share: These reconciliations are provided as additional rel
Slide 30: GAAP Reconciliation: Net Debt & Free Cash Flow
GAAP RECONCILIATION: NET DEBT & FREE CASH FLOW Reconciliation of Total Debt to Net 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
Slide 31: GAAP Reconciliation: Sales Excluding Planned Program Exits & Currency Impact
GAAP RECONCILIATION: SALES EXCLUDING PLANNED PROGRAM EXITS & CURRENCY IMPACT Reconciliation of Net Sales After Planned Program Exits for the Total Company and Mobile Industries Segment to Net Sales The following reconciliation is provided as additional relevant information about the Company's perfor