Slide 1: The Timken Company Investor Presentation December 2012
Exhibit 99.1 THETIMKENCOMPANY INVESTOR PRESENTATION DECEMBER 2012
Slide 2: Forward-Looking Statements, Safe Harbor and Non-GAAP Financial Information
FORWARD-LOOKING STATEMENTS SAFEHARBORAND NON-GAAPFINANCIAL 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 Pr
Slide 3: Investor Relations Contact
INVESTORRELATIONS CONTACT Steve Tschiegg Director -Capital Markets & Investor Relations PH: (330) 471-7446 E-mail: steve.tschiegg@timken.com
Slide 4: Timken Overview
TIMKENOVERVIEW A global industrial technology leader applies its deep knowledge of metallurgy, friction management and mechanical power transmission to improve the reliability and efficiency of machinery all around the world Our high-performance steel and mechanical components support diversified ma
Slide 5: The Timken Company Today
THETIMKENCOMPANYTODAY Aerospace & Defense -- Nine Months 2012 Diversified into transmissions Total Sales: $3.9 Billion and aftermarket Sales: $263 million EBIT Margin: 10.0% Aerospace & Defense Steel -- High-performance, customized alloy steels Process Global -- growth 7% beyond bearings, diversifie
Slide 6: Strong Ties Between Businesses Drive Value
STRONGTIESBETWEEN BUSINESSES DRIVEVALUE Process Industries | Mobile Industries Steel | Aerospace & Defense • Energy • Aerospace & Defense • Automotive Common End- • Mining • Industrial Machinery • Rail Market Sectors • Construction • Agriculture • Heavy Truck Shared Customers • Best in class provide
Slide 7: Timken Strategy to Deliver Shareholder Value
TIMKENSTRATEGY TO DELIVER SHAREHOLDER VALUE Using our knowledge of metallurgy, friction management and mechanical power transmission to create unique solutions used in demanding applications. Offeringa broad array of mechanical power transmission components, high-performance steel and related soluti
Slide 8: The Strategy Is Working: Top Quartile Performance
THESTRATEGY IS WORKINGT : IMKENHASDELIVERED TOP QUARTILE PERFORMANCE Timken has delivered top quartile performance versus comparable companies in: EBITDA margin Return on invested capital (ROIC) (1) Source: Company filings and Factset as of October 26, 2012. Represents average of 2008 through LTM 20
Slide 9: Delivering Strong Total Shareholder Returns
DELIVERING STRONGTOTALSHAREHOLDER RETURNS Last 5 YearsTotal – Shareholder Return Last 3 YearsTotal – Shareholder Return SKF 71.2% Carpenter 100.9% Timken 45.1% Timken 67.8% Altra 11.6% Kennametal 63.2% Kennametal 8.0% Altra 52.1% Nucor (7.8%) SKF 42.9% Carpenter (27.2%) Nucor 9.0% Steel Dynamics (40
Slide 10: The Strategy Is Working: Key Takeaways
THESTRATEGY IS WORKING: KEY TAKEAWAYS 10
Slide 11: A Multi-Faceted Transformation
A MULTI-FACETED TRANSFORMATION Markets Geographies Products Performance 11
Slide 12: Portfolio Diversification: Broad-based end markets and customers
Portfolio Diversification Broad-based end markets and customers Increased sales from demanding applications Expanded channels into the aftermarket; represents approximately 25% of global sales 12 Note: End market sector diversification based on 2011 sales of $5.2 billion.
Slide 13: Emerging Markets: A Source of Growth
EMERGINGMARKETS: A SOURCE OFGROWTH Emerging market growth 10-Year Sales Revenue CAGR -- 15% Diversified global scope, ($ in Millions) growing faster outside the (1) U.S. 13 Note:(1) Geographicdiversificationbasedon 2011salesof $5.2 billion.
Slide 14: Product Line Expansion & Diversification
PRODUCTLINEEXPANSION& DIVERSIFICATION Bearings Specialty Steels Power Transmission Related Products Services 14
Slide 15: New Acquisitions, New Capabilities
NEWACQUISITIONS, NEW CAPABILITIES Differentiated performanceIndustrial • focus Strong • aftermarket Supply • chain synergy Sales/Timing Sales: $85M Sales: $100M 2011 Sales: $23M Purchase date: July ‘11Purchase date: Oct. ‘11 Purchase date: Sept. ‘10 Product Gear drive repair Engineered chains Mounte
Slide 16: Delivering Superior Financial Performance
DELIVERING SUPERIORFINANCIALPERFORMANCE 3 year average EBIT Margins 3 year average ROIC Note: Theabovedata representsan averageof 2010through LTM2012. Segmentreturnshavebeenadjustedto reflect a proportionateamount of unallocatedcorporateexpenses. Taxrate assumedat 35%for return on investedcapitalcal
Slide 17: Mobile Industries
MOBILEINDUSTRIES Segment Overview Sector Profile Bearings, power transmission components and related products and services Serves diverse market sectors Customers: OEM and aftermarket distributors Portfolio shift toward attractive markets; In 2005 passenger car and light truck was 54% of the portfol
Slide 18: Process Industries
PROCESS INDUSTRIES Segment Overview Sector Profile Precision-engineered bearings and related mechanical components and services for diverse industrial markets Diverse and global customer base ~65% aftermarket in 2011; consistent, profitable business Diversified product portfolio 56% tapered roller b
Slide 19: Aerospace & Defense
AEROSPACE & DEFENSE Segment Overview Sector Profile Power transmission systems and flight-critical components for civil and military aircraft Top 10 aerospace platforms represent 38% of sales in 2011 Aftermarket engine overhaul, replacement parts, bearing and component repair Aftermarket channel rep
Slide 20: Steel
STEEL Segment Overview Sector Profile Market leadership position in high quality 2011 sales: $2.0B air-melted alloy steel bars, tubes, precision components and value-added services Bars: 1”to 16” Tubes: 2”to 13” Serving niche high-end applications where demands on performance are significant Special
Slide 21: Financial Review
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Slide 22: 2012 Results – First Nine Months
2012 RESULTS – FIRSTNINEMONTHS Sales of $3.9B, up slightly from prior year Driven by acquisitions, pricing & mix, partially offset by lower sales volume and the impact of currency EBIT of $684M, or 17.5% of sales Includes CDSOA receipts of $109M & St. Thomas plant closure costs of $26M Earnings bene
Slide 23: 2012 Results – First Nine Months
2012 RESULTS – FIRSTNINEMONTHS Free Cash Flow of $112M vs. $(230)M use of cash in prior year From operating activities after pension contributions, capital expenditures and dividends Includes $245M of discretionary pension and post-retirement benefit contributions and $68M of CDSOA receipts, both ne
Slide 24: Sales
SALES Net Sales ($ Mils.) Outlook 2012 Sales Estimate: down 3 to 5% Weakening demand, including exited light vehicle business as well as lower surcharges, to be partially offset by price & acquisitions 2014 Sales Target: 3-YearCAGRof +7 to 12% global GDP recovery/ growth in 2013-2014 of 3.5% to 4% i
Slide 25: Earnings Per Share
EARNINGSPERSHARE Net Sales Net Sales Midpoint Estimate Earnings Per ($ Mils.) ($ Mils.) Share Outlook 2012 EPS Estimate: $4.75 to $4.95 per diluted share includes CDSOA receipts of $0.70 and St. Thomas closure costs of $(0.30) 2014 EPS Target: $6.50 to $7.00 per diluted share redeployment of capital
Slide 26: Free Cash Flow
FREECASHFLOW Free Cash Flow ($ Mils.) Outlook 2012 FCF Estimate: $145M after, - CapEx of $300M 2014 FCF Target* - dividends of $90M ’02-’09 Cycle Avg: $87M - discretionary pension / VEBA trust contributions of$245M 2012 FCF (net of tax) Estimate ’91-’01 Cycle Avg: $16M 2014 FCF Target: $250 to $300M
Slide 27: Capital Spending
CAPITALSPENDING Capital Spending Cap Ex ($ Mils.) % of Sales Outlook 2012 CapEx Estimate: $300M - driven by global energy, mining, infrastructure and heavy industries growth - targeted +20% IRR hurdle rate - ~$80M maintenance spending 2013-2014 CapEx above long term target Note: Estimated 2012 capit
Slide 28: Pension
PENSION Discount PBO Rate Funded % Outlook 86% 84% 2012: - discretionary pension contributions of ~$210M, net of tax - expected funded status of ~90% 2013 –2014: - expected discretionary pension contributions of ~$100M/year, net of tax - targeting to reduce liability through potential lump-sum and a
Slide 29: Net Debt
NETDEBT Net Debt Net Debt ($ Mils.) /Capital Note: 2003 includes Torrington acquisition as acquired February 2003. Net debt is not a GAAP measure. Net Debt / Capitalis(leverage) defined as Net Debt / (Net Debt + Equity). See Appendix for reconciliation of Net Debt to the most directly comparable GAA
Slide 30: 2012 Capital Allocation Highlights
2012 CAPITAL ALLOCATION HIGHLIGHTS • $300M to be spent on • Strong balance sheet to growth,continuous fund future acquisitions improvement and maintenance Strong Capital Redeployment • Discretionary contributions • ~$180M returned to of ~$245M, net of tax shareholders YTD (9/30/12) • Expected pensio
Slide 31: Return on Invested Capital
RETURNON INVESTEDCAPITAL Return on Invested Cost of Capital Capital *Rolling 3-year targets are typically provided annually and were last updated Note:The company uses NOPAT/Average Invested Capital as a type of ratio that indicates return on invested capital (ROIC). Feb. 14, 2012. See Appendix for
Slide 32: The Strategy Is Working
THESTRATEGIS WORKING Delivering exceptional results witha passion forsuperior execution. 32 Using our knowledge of metallurgy, friction management and mechanical power transmission to create unique solutions used in demanding applications. APPLY Our Knowledge — Offering abroad array of mechanical po
Slide 33: The Timken Company Investor Presentation December 2012
THETIMKENCOMPANY INVESTORPRESENTATION DECEMBER2012
Slide 34: Appendix
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Slide 35: Geographic Profile
GEOGRAPHIC PROFILE 2011 Sales: $5.2 Billion Global Footprint Over 70 manufacturing facilities and distribution centers across the globe 10 global Technology & Engineering Centers Nearly 90 sales offices to serve customers in different regions of the world Global Sales Diversification Excluding Steel
Slide 36: Incentive Compensation
INCENTIVECOMPENSATION Annual Long-Term Short-term Operational 3-Year Strategic Business Long-term Shareholder Objective Business Priorities Priorities Value Creation 160 Senior 160 Senior Leadership 265 Mid-level Participants 6,000 Associates Globally Leadership Associates Managers Associates 4 Year
Slide 37: GAAP Reconciliation of EBIT and EBITDA
GAAPRECONCILIATION OFEBITAND EBITDA ($ Mils.) Thisreconciliationis providedasadditional relevantinformation about the Company’sperformance.Management believes consolidated earningsbeforeinterest and taxes(EBIT)are representativeof the Company’sperformanceand thereforeuseful to investors. Consolidate
Slide 38: GAAP Reconciliation of ROIC
GAAPRECONCILIATION OF ROIC ($ Mils.) Reconciliation of ROIC to GAAP Operating Income Management believes ROIC is representative of the company’s performance and therefore useful to investors. 12-Months Ended 9/30/2012 12/31/2011 12/31/2010 12/31/2009 12/31/2008 GAAP Operating Income $748.2 $729.1 $4
Slide 39: GAAP Reconciliation of Segment ROIC
GAAP RECONCILIATION OF SEGMENTROIC ($ Mils.) Reconciliation of ROIC to GAAP Operating Income Management believes ROIC is representative of the company’s performance and therefore useful to investors. Mobile Process Aerospace & Defense Steel LTM LTM LTM LTM 2010 2011 2012 2010 2011 2012 2010 2011 201
Slide 40: GAAP Reconciliation of EBIT
GAAP RECONCILIATION OFEBIT ($ Mils.) This reconciliation is provided as additional relevant information about the Company's performance. Management believes consolidated earningsbefore interest and taxes (EBIT)are representative of the Company's performance and therefore useful to investors. Managem
Slide 41: GAAP Reconciliation of Free Cash Flow
GAAP RECONCILIATION OFFREECASHFLOW ($ Mils.) Reconciliation of Free Cash Flow to GAAP Net Cash Provided (Used) by Operating Activities: Management believes that free cash flow is useful to investors because it is a meaningful indicator of cash generated from operating activities available for the ex
Slide 42: GAAP Reconciliation of Net Debt
GAAP RECONCILIATION OFNETDEBT ($ Mils.) Reconciliation of Total Debt to Net Debt This reconciliation is providedas additional relevant information about The Timken Company's financial position. Capital is defined as total debt plus total shareholders' equity. Management believes Net Debt is an impor
Slide 43: GAAP Reconciliation of Free Cash Flow
GAAP RECONCILIATION OFFREECASHFLOW Reconciliation of Free Cash Flow to GAAP Net Cash Provided (Used) by Operating Activities Management believes that free cash flow is useful to investors because it is a meaningful indicator of cash generated from operating activities available for the execution of
Slide 44: GAAP Reconciliation of Net Debt
GAAP RECONCILIATION OFNETDEBT ($ Mils.) Reconciliation of Net Debt to Total Debt and the Ratio of Net Debt to Capital Management believes Net Debt is an important measure of Timken's financial position, due to the amount of cash and cash equivalents. 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Slide 45: GAAP Reconciliation of ROIC
GAAP RECONCILIATION OFROIC ($ Mils.) Reconciliation of ROIC to GAAP Operating Income Management believes ROIC is representative of the company’s performance and therefore useful to investors. 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 GAAP Operating Income (1) (9) 42 14 132 203 247 280 2