Timken Stock Falls As Q2 EPS Misses Estimates, Maintains FY21 EPS Outlook

Timken Co TKR reported second-quarter sales growth of 32.3% year-over-year to $1.06 billion, topped the consensus of $1.05 billion. Sales growth was driven by strong organic growth, the benefit of currency translation, and the Aurora Bearing acquisition.
Sales by segments: Process Industries $568.7 million (+23.4% Y/Y), and Mobile Industries $494.2 million (+44.2% Y/Y).
Adjusted EPS improved to $1.37 from $1.02 in 2Q20, and missed the consensus estimates of $1.45.
The gross margin contracted by 22 bps to 28.4%.
The operating income increased by 31.7% Y/Y to $152 million, and the margin was at 14.3%.
Timken generated cash from operating activities year-to-date of $178.8 million, compared to $303.6 million a year ago. Free cash flow of $118.3 million.
Adjusted EBITDA was $200.3 million, compared to $164.2 million in 2Q20, and margin contracted by 160 bps to 18.8%.
The company says customer demand remains extremely strong across most sectors, and they plan for the industrial expansion to continue through 2022.
"While supply chain and other cost pressures are likely to persist through the rest of the year, we expect to deliver record revenue and earnings per share in 2021 and move into 2022 with significant market and operational momentum," said Timken's president and CEO Richard G. Kyle.
2021 Outlook: Timken maintained its forecast for GAAP EPS of $5.00 - $5.30 and adjusted EPS of $5.15 - $5.45 vs. a consensus of $5.39.
It expects revenue to be up ~19% at the midpoint (prior 18% at the midpoint) in total versus 2020.
Price Action: TKR shares are trading lower by 3.04% at $77.08 on the last check Monday.

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