The Timken Company (TKR) 3 Aug 232023 Q2 Earnings call transcript

Good morning. My name is Brika, and I will be your conference operator for today. At this time, I would like to welcome everyone to Timken's Second Quarter Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers’ remarks, there will be a question-and-answer session. Instructions] [Operator

Frohnapple, your Mr. may you you. conference. begin Thank

We to quarter Neil XXXX Brika, Timken Director and conference second everyone welcome, Company. The for is Thanks, earnings us our call. Investor Relations you appreciate joining of today. Frohnapple, This

our will begin I morning, of the review reference we as this out the company's quarterly want materials of posted part presentation remarks on point results. website that we Before to have that we today's

the on call material through the You webcast can also feature link. access this download earnings

me today Timken The Chief are Rich Kyle; Company's CEO, With Financial President and our and Phil Fracassa, Officer.

have up from both the will Rich open your comments for we questions. before We this call opening and morning Phil

and everyone Q&A, time ask During I one chance limit a that up would your at participate. to please a one allow the you follow to question questions to

During our you to forward-looking future business statements financial today's related operations. may and plans call, hear results,

materially to greater factors, projected filed results those or timken.com which may actual with in the today's due detail we differ which in press on release SEC, implied our Our website. the available and of reports from describe variety are a in

We have its release equivalent is the use, any and of presentation portion financial included transmission non-GAAP any press without call Timken the of copyrighted call. consent, reconciliations materials. Today's the Company we prohibit information and by in and GAAP written between expressed recording or

and Timken would I will Rich. Company the that, like turn With I in the for to you over interest now thank to call your

to record of cash record record share. flow. our free quarter operating earnings we an second second We achieved morning, delivered higher Good and another revenue over call. for year and year track Timken on quarter significantly Neil. last thank and delivered We margins and per joining we Thanks, you expanded performance. remain excellent deliver

currency despite Organic XX% the the was prior XX line points up year. year more close up XX.X% of on than up X% EBITDA nearly over X% margins total, headwinds. top quarter. were in revenue continued in basis contributed to last Acquisitions and revenue from was

moderated, remains over has were inflation inflation up year prior and costs While persistent.

chain Earnings to persistence improve Productivity year. for positive of for supply XX% were remainder from the $X.XX the remained record quarter. year up of continued the were and and and has Despite to of normal. will essentially inflation, the prior performance price/cost a second returned

the to addition earnings. to And In organic significantly share flow sequentially contributed growth stepped cash growth, and and year-over-year. buyback the acquisitions both up in

we've the The shares we a under acquisition linear During expanding already Linear integrated organic market diversification has Nadella Rollon of growth organization and company. Group. management initiatives and just our to portfolio motion the the several motion improve of is of purchased the key contributor off acquisition completed outstanding to the within a profile. of and continues quarter, we been our our team and start to our Nadella, X% good areas

our expand advance our manufacturing business in continue position Phil in We a invest the listed entity also our reduced ownership as we and technologies. on which in to into we and moment footprint CapEx India, will

new our operating and of two segmentation motion already We are the is bearings results. under and now quarters into industrial reorganization engineered yielding

two have inorganically. headroom segments organically both to and We continue to with expand market-leading ample

a deck, of the which the wide macroeconomic Timken Slide I in to high-level to continues earnings performance XX a outlook, margins. conditions. for turn want to variety and through I Before our reference investor revenue, highlights at five-year perform

strategic and the CapEx proven buyback growing that steadily M&A in share over market and and and time we and our Both both capital positions ability of have have value includes into Engineered are We has approach created strong that through value. a Bearings. to the create financial and dividend, to both generators strong balanced back Motion businesses disciplined cash Industrial allocation business,

earnings during each and have has of the revenue year basis varied record a year been except points margins 'XX performance couple share COVID hundred and what only economic Result for has our a of per been volatile cycle. particularly

in a level revenue to grow company. and and forward are at to of earnings high our to to continue perform continue moving We confident the the ability

to Turning outlook. the

are revenue of now X% midpoint. at We the forecasting year full growth

reminder, to a our As for second is earnings. from normal first to and seasonality half decline both revenue half,

decline a greater continuing are We strong year on to XXXX forecast this than comps. normal very

to to supply and reliability operated quarter, normal see levels are second now to orders the customers we reducing levels. at continued lead chains During inventory times and that adjust

expect We through continue the year. that to of the end

the remain softening bullish forecasting macro year, the drivers demand on for of most and we sectors the constructive across into their While remain sequential customers rest are geographies and XXXX.

that on You backlog. year there deck our updated recent some been in have up, full reflecting down, X with and see in order movements Slide for our IR outlook some the activity guide markets, some can

well rebound been of China's than has less publicized, been this As coming year out COVID expected. has

double-digits but for factored in outlook in include have up a and China less bullish year-to-date, This specifically second Asia half. energy. the Our Asia we are would results renewable

quarter up share would From the of earnings guidance last includes of actions 'XX. That allocation are XX% of in we earnings midpoint. taken per a The slightly $X.XX revenue line be to midpoint all year. be imply at range to bottom capital up guide from $X.XX, the the through and the forecasting of perspective, which margins the would second impact

continue better factoring lead and in on-time improved expect our own performance are volume levels with from we as we inventory deliveries. in improved supply chain times line manufacturing to we headwinds get While dynamics,

realization to moderate comps. we to expect year, We to to pace although, but expect due partially to of moderate. remain for the the Similarly, positive continue costs prior elevated, continue versus price remain to tougher to increases further

M&A. the second year. half to with the times plan second end in We remain a to a assume of we at standpoint in year strong at from of continue net through cash cash half price/cost and allocation the the half positive June the and with to active X.X to for to EBITDA strong also debt flow, of be flow expect year, We the bias second continued be capital

excellence We outgrowth initiatives, are very inventory in operating across efficiently our CapEx We consolidation. these to portfolio, to provide plant we capacity our into driving initiatives productivity would capital initiatives 'XX. operational with the and allocation on self-help actions, and and our from more automation, expect investments today are management along and focused significant heading

will annual We upcoming corporate the our publishing responsibility be also report in social quarter.

remain was we programming will our XXXX another continue of well advance year and be to drive operations to revenue Timken for beyond earnings industries we continue Our social excellent of of 'XX. in a and for and our leader. diversified and we We committed on evident value record our as to communities global team half It Timken the in are the back as our as in is to and corporate products progress Examples drive track advancing all industrial our and stakeholders sustainability first of across responsibility serve. positioned we give to global, an report.

over on go results And more I the outlook. to detail Phil to will with and that, it into turn

Thanks, everyone. and morning, Rich, good Okay.

record over revenue For second Slide of the XX% on our I'm in materials a the up XX adjusted earnings an in $X.XX, year margins just Adjusted financial a on for company. Timken we review, from the quarter, share results. EBITDA with up for invested record presentation billion going to per strong attractive with of quarter, all-time XX.X%, almost last at the from a $X.X and achieved of posted along came capital. points the XX basis last new quarter start second summary of return And year.

XX. Turning to Slide

by up strong sales at a growth pricing both our were X.X% Organically, saw from volumes year. Motion. quarter Industrial benefited Let's performance. across second the segments, growth closer unit driven last we by led from continued segments, both with levels from sales modestly Organic take last year, look up higher in

the currency the points at divestitures, a point was top nearly rest acquisitions, of including net in and Nadella quarter. walk. GGB, growth ARB, Recent of line while foreign the X Looking percentage the translation contributed headwind X revenue of to

by both America, currency region flat, was was We performance China North driven also region, saw up up which year's excludes smallest in On against the our see last last were was acquisitions. strong in Latin of lower double-digits, versus regions growth roughly the in growth the quarter. by strong can and slide, right-hand region, side both Asia-Pacific We Notably, largest organic EMEA our across mixed quarter. year. and while our India. America, second you

in quarter $XXX second XX. XX.X% the compared million, to was to of Turning sales Adjusted or million, sales last EBITDA XX% of or Slide $XXX year.

price incremental logistics around the in impact costs by at We change more delivered the impact a of adjusted EBITDA other lower price positive These and from SG&A quarter. higher Looking and costs unfavorable material net the of favorable year-over-year operational XX%, driven of manufacturing positives offset and in and costs solid we than margin dollars. acquisitions. execution. mix, Overall, benefited the

just if under and you organic acquisitions, our currency XX%. was Excluding incremental, will,

the Let further me in few on a little quarter. drivers comment a profitability the of key

Looking at the both price neutral was meaningfully while quarter. relatively was in higher mix segments compared to Pricing last mix. in year,

material have less Moving rates pre-COVID more as or to logistics. year-over-year, with to bigger Both contributor freight were logistics the and levels. lower returned

line, impacted of the year. volumes amount second of in production negatively were we quarter inventory manufacturing as the we On lower last built sizable by a

inflation across our including We saw continued costs, also input labor.

up operational levels. inflation finally, expected, On chain by benefited and from SG&A business activity we higher and other spending side, on productivity as impact And driven sales solid of as the year execution, our the we higher support we and were dynamics. costs supply improved positive increased the delivered from last to line,

on XX% reflecting On net the expense you that Note items completed earned benefited per diluted from share buybacks quarter the million On share XX $X.XX This of year. in amortization. or a from and months. past Slide share an we $X.XX adjusted count share, the lower deal a posted net in see up we income we've quarter, last per includes for GAAP basis. we that basis, the $X.XX can from $XXX XX, of special

last mix earnings Our driven was slightly, by versus year, we expense as and adjusted up was interest tax higher our geographic of anticipated. rate

Slide Engineered Now our to XX. segment let's on starting results, business with move Bearings

line, points up declined sales X.X% net growth pricing offset and while translation For top The gains sectors comp of quarter, and Renewable more sales across divestitures Engineered $XXX growth Energy by difficult the were posted quarter. last than Bearings foreign last all the to a as million, reduced up year. points the net distribution volumes higher against quarter, basis. from X.X Organically, effect on lower year. strongest currency percentage in while second segment a sector in the added X were of the percentage X.X%, acquisitions Rail

price/mix sales, adjusted were manufacturing Segment volume year-over-year second quarter as material by margins costs, flat of to lower compared million were costs Bearings lower higher $XXX million favorable and Engineered offset $XXX or of XX.X% currency. the EBITDA and was unfavorable in and last the year. logistics impact

acquisitions, on year-over-year incremental XX%. organic was and currency exclude over of you an basis, If Engineered Bearings the impact margin in our

let's Motion Systems, turn XX. shipments Industrial by Automatic sales Motion Organically, growth year. up Drive quarter, XX.X% partially led Industrial second million, in growth Belts Lubrication and lower strong XX.X%, segment Services Now sales last increased Systems to by to $XXX and Slide on In offset in and the in from Chain. were

positive points to the platforms quarter the the realized of the of also in around ADS all divestiture, top net line. and pricing percentage We acquisitions, contributed across impact X

sizable EBITDA which was adjusted benefit compared year. improved segment price sales was volumes, operating for margins positive of million operational impact execution costs. sales The or the the quarter offset by Motion driven and the million XX.X% increase higher or the than $XX XX% to Industrial $XX of higher of more on cost of second last in

Slide to XX. Turning

You cash year, offset the repurchases. higher buybacks through From performance shares versus standpoint, as earnings share to cash of cash of returned flow capital million we big third as $XXX and raised by significantly to capital active dividend quarterly that far shares X% flow our thus We quarter. $XX working spending. $XXX continue X.X million outstanding. to growth more taxes shares a CapEx about generated Free in repurchased and allocation we and the brings of around up quarter. shareholders quarter, million, or our than operating over last million it can was we cash see was be a in million dividends year-to-date X% and X.X This and improved

just which Limited Timken stake Rich pretax $XXX an covered. We of proceeds completed million the And April, ownership India of our generating already under Nadella beginning controlling at we our the acquisition at and to of June, has attractive at reducing in XX%. reduced value, around end stake the

to on maintain to our proceeds going the expect accretive market to intend India allocation use capital Timken bullish We to per India a net basis. a and XXXX, initiatives share during the is to be remain earnings in which on support controlling We expected stake forward.

quarter remained at Note investment-grade continue to adjusted leverage balance impact year last net debt net times, generate the to range. to advancing at half, a from India the and allocation of includes the transaction and unchanged our EBITDA we was sheet. acquisition Looking our that priorities. end the well Timken cash X.X Nadella With I great which significant our mentioned. the ended with free just We of strong the sheet we capital and remain second within expect in in our targeted position the balance flow ratio

turn let's on summary a XX. the to Now outlook with Slide

total for or down updated uncertainty. for for order X.X% to the slightly Starting be midpoint, from organic the off to on earnings strong and price to year, volumes outlook be trends now to now our at We at outlook. is sales As near-term positive growth. Rich lower sales expect economic reflect both guide, prior for modest our X% which last reflecting midpoint the the year. indicated, realization continued organic and more our versus slightly X% current up We're up sales expectations in XXXX, revenue planning includes which we've X% and performance

in unchanged of should currency Acquisitions, assumptions our for contribute will our off-highway, including X.X% renewable growth for to top Our net full to we're the relatively reducing guide. be neutral which prior inventory to be energy. the we're include and planning guidance And distribution divestitures, growth assumes half. for year. in essentially China, the certain would customers slower sectors, also line in Both second around planning and from

implies of XX.X% reflects for EBITDA The which net expect would Note the organic includes mark range that India the of represents at a record new level company. adjusted revenue This On consolidated mark per to this updated new the our margin now to $X.XX for company. outlook high XXXX XX% midpoint be XX.X% that of growth a line, at midpoint in our the modest from earnings Timken transaction. we last bottom will share the our the earnings margins adjusted the $X.XX. range all-time some in about This year assumption. midpoint, would and accretion versus the

cost Our lower and expansion execution, impact margin our expectation reflects the volume operating should costs. price operational for of higher improved offset than production favorable more which and

favorable last sizable saw currency headwind margin off continues to our assumption reflect addition, In a we from the impact year.

be gross cash prior to words, guide were related the Note free guide, other of flow. We full In India now as last paid $XX year, our Timken in to Moving in from cash the received $XXX around that working updated higher up we taxes essentially unchanged over the to million of is outside financing to half that activities. second outlook million capital improved earnings includes for impact generate free cash our over is flow. proceeds year structural Note our which $XXX expect and flow million net performance. in free of transaction. the from and reflects the reflected cash June from

cash our XXXX flow India GAAP over net on the outlook represent XXX% the for taxes, would midpoint. at conversion free income Excluding

plus anticipate from the of million We And to and XX%, $XX now of in rate of be of guide. our we minus, interest continue for or net expect to prior around range slightly expense the our around to X% tax up adjusted XX.X% CapEx sales. year,

earnings quarter, grow confident to ability for We're second and drive priorities. the our over record our and the in and power advance of capital the another we're strategic allocation results strong delivered company to our Timken and track summarize, in to So we strategy year time. continue on

the questions. formal Operator? our we'll now and for This open line concludes remarks

Please We go [Operator ahead. you. Steve Volkmann Instructions] question from of have Jefferies. first Thank

activity. Good since frustrating sure Good market in have sort you. Rich, Thank stuff stock reaction. to you're get what it's see slower I I'm to of of trying on is, is sort morning, to end seeing going here. to Great. the terms it at guys. But that what poke of

that I is do the of downgraded you several of Slide markets. way to maybe end relative So to the know kind X.

the maybe that about to outside markets so you at customers' be on the downgraded a seeing, I talk us couple and what pretty strong, end look appear your because those upgraded you others. know when I you're of just and forth. you think of But production forecasts we could to

this And do is does or demand so last it inventory it if you is, just all there's And long reduction? some actually here? how think destruction

I don't demand destruction part there's any to that think answer first.

I are seeing Steve what good. underlying demand. selling know into is it think industry overselling really be and also inventory, very And customers, hearing is our for you demand we and us, that the as normal the from on underlying data is normal underselling. and And generally, they're what the is and key that's customers to

X, markets with marine better moved to industrial up We then No few was moves left, that slightly So we and there, digits. and anticipated months to moved high-single from backdrop, distribution the and just we on the and what automation Slide ago. that two than And a industrial moved services digits mid-single to we three off-highway. right. major but

then across China, did but mentioned, -- start China, order we've gotten we in And softening a to broader would very see the off in to the China. say, as we year space, I which good

total, in the China less second would year. a half of on we the little optimistic for be So

customers experiencing would particular So to where we in your of I stronger off-highway. what seeing think report results we than be comments hearing are much and are

large organics in all But the inventory some of volume. recently reducing to of price, mid-teens also their OEMs half. up with second unit in double-digit XX%, reported couple that A they have but over about talked

So not we XXXX, on still guiding think -- while the that. I bullish are to demand. They experiencing underlying remain

outlook seen share the we've no where space the material there's there. what's think, I one, the in be largest our across and changes would happening that versus So separation

a would a same large reported that reporting not are but we're that be input stronger in publicly rates. are their sell-through numbers mid-single-digits reporting than and the our situation in below half are of little second XX% pronounced Europe then orders be story, getting And growth, the although -- been they in U.S. are year, down less the where similar going distributors industrial and distribution, to probably XX%

Got it.

And major That's when to into a I'm control spins, of maybe and has pun while. But on that sector. but maybe like some try that a not on not on run about then specifically, suppliers should at one My issue be not of wind. this, anything least energy the does expert for the little producing just Okay. no look intended, I'm they briefly I we an kind may at head global wind renewable looks sort it big and quality How with impact in specifically? think of wind, you? weeds helpful.

would a strong be exception want the for specific year very having with standpoint, China a up. answer issue be looking the a not comment don't believe, will no, be I start the from to we're more, story. to like there again, customers, on that it demand -- but to question And your standpoint of any full a us, I or revenue to year,

as about, of growth the rate. in well there's a this of slowdown -- same cooling rate. little the a of normal wind we cooling market China, growth quarter. We and a things expecting in Usually We're necessarily the a contraction but expecting combination overbuilding a one just year are as fourth in from seasonal for the pronounced. of fairly China us greater a the Not talked bit

time a contracts changed need nothing optimism it. energy. about market about the our wind, little pauses, long-term decade, renewable little a more time. to say is we've has, has bit on going a lot The world more to market. been And only than The in It a the in thing from I'd

lot But headroom path linear. that still good we and is a So believe market, the certainly for not in growth longer we feel it about growth of there's term.

pass you. Great. I’ll it Thank on.

Thanks, Steve.

We now have of you. Bryan Blair Thank Oppenheimer.

Thank you. Good guys. morning,

morning. Good

and guide. could channel second dynamics you're full in and you I through influenced QX. distribution it's mix I seeing the impact that detail through year quantify assume more volume both exactly what reset was order to cadence QX, on much hoping markets And half? the offer how little the in industrial perhaps a trends, those off-highway

Yeah.

On and the to within orders that's there industrial of of days. in that's order, an element distribution vast made majority that out is is that but side, backlog, the

we line input So rate to say what the that looking you're et of that and customers have what I'd their inventory softening some from much have customers the levels, direct look just inventory at we information And the saw you selling on through channels, that sales more cetera. sequential in is quarter, half. some trend there we're they're really second of the and into to the your reduce the getting where they're

eight execution. expected months setting with to is visibility Off-highway in orders a of a go get we weeks, differently seeing We're need good you line quarter And you second of own inventory. customers is chain from where were one weeks we're and our more looking to telling be need supply good less again, softer than three, less most that doing come generally. this the us, better revenue the And from in but that half. demand softer, ourselves. second we're adjust. a for four orders, a lead working places, to have in what And chains pretty four a up improved would they're to And didn't XXXX, standpoint, lot dramatically times but supply inventories for of of we reflection when generally, ready

environment? can off recalibration Your bit of Understood. you're shape, obviously balance And sense. cash. color a solid throwing high-level quite That sheet makes deal on in one. offer the you is Any but a

there. So capacity is

You've been of on while M&A. foot front terms in your a for

end the seeing, confidence what this have one curious Just another the in getting perhaps line you across deal of year? pipeline the you're by and

remains rates and went but interest slow. X, was robust not It's So it's COVID. inbound as not it the up as I'd say fairly before

making doors see not something we bring well so and our I finish outbound, line XX would I the find And across hasn't the the all. -- slowed certainly down within on knocking real slower, contacts that's at we're no the months. next would But been think it's reason publicized. we're and

year, active XX history in able yet certainly say to I our that. be And think want would say wouldn’t pipeline I this we do enough. would months, but is to the next

As with said, the sale TIL to the we generate in cash half a deploy a expect or one would to next in and ‘XX towards a cash the to contributor we’re have down, XX we to do be good bias months the second other generated I the in capital position to we the it with to certainly we’re M&A going six meaningful months along from earnings.

Understood. Appreciate the color. Thanks, again.

Thanks.

Thanks, Bryan.

have Rob Melius Wertheimer now We of Research.

everybody. morning, Good Hi.

So of I with understand the reaction same the thing, little but a on agree Steve I kind is confusing.

I destock inventory surprise that OEM not given or Just is channel think been it's anticipated. destock and a

on One, strong. So to of couple question, destock? seems like a China, are Rich, a just pretty comments your It clarify a renewables that is questions.

loaded market OEM much? share a shift that is -- up orders there too else explaining any China? is a or bit So anything in Is slowdown in

at -- it capacity was here. ramp now equilibrium And and We we couple far want be build, build, hey, online, years a to we're coming this ahead of it. it is of Well, build, up. of an it's definitely don't

still it call call deceleration. a right would I it far I So destock, bucket. our wouldn't And a in it's

quite as be as a early the it's as to in as we going year. this on had it's to to or to much as too It's grow going but high anticipated. just not more, be what grow So had anticipated. we what high-single-digits It's still half up growth not just second looking sector. to And quite going call XXXX,

see cat you guess and then maybe of raw I ] Perfect. [ sort can materials others. elevated And of

in a to how as one the there. and quarters And or do so was I'll whether you to and drag might a there. destock big can stop shock you it so a be? sales or magnitude big -- quantify two get past how have we to the in big any Just it sense through of it not drag But how the and boost a the timing

Yeah.

drag bit. was certainly we about the larger would one, the OEMs, lot little it's there's felt a that a would normal -- drag. already. expect be a and sequential seasonality, fourth also for drag quarter around a flow in we So quarter first of and quarters it it in then We things We a three getting it the upped continue with We just think particularly been cash to right? Typically, year-end focus right. the there's and talked

It's in And first of the for XX% first or pretty quarter. our the XX% in in of half normal of up XX% year -- XX% second year. right we jump half or then the have revenue but back us and the to the usually

So to we are expecting last year. it

up expecting we some past not like expect think jump how surge step year the much it's in end years. had of just we're quarter So question shipments the the in we've at year. I sequentially certainly But the a to And the we start a from up fourth of to to first.

it’s and we side, did renewables. markets, see portfolio. I industrial hit off-highway flip the the highlighting we distribution But – And some of markets to one the in business strong move really the Got on know is quarter thing I right. backlog second got start diversity of a during would end the a a – in marine, the really the great to to and the off services, we’ve to add right, had second did the Industrial good some new at move over very that year, started quarter. and which

that the to right. So moved we over

had And strong half. first then a automation

second a We expect half. strong

again, off-highway are the the is, conditions highlight company. the renewable sectors or distribution, other seeing company, and robust of a sectors, diversity strengthening even we which growth to verticals other certainly, in big and are So for industrial but

it. Thank you. Got

Rob. Thanks,

question Please of next Barger Markets. from KeyBanc Your go comes are Steve Capital ahead, when ready. you

-- to your at line emerge And organic to And reduced inventory are in around growth's I around view How did yeah. to did because Hi. sequentially. quickly you weakness your view get Thanks. went organic where quickly inventory up want how then it Good many looking the morning. quarters of growth How the quarter? the we in be? production asked

have would Yeah. acquisition flattish. the we in like but consistent Steve. so. there. it the about on talked been we on currency, Hi, say But -- April organically, with or had April, slightly talked went was $XX inventory, more tell it This is We trends here don't you down, I sequentially. about and it we million were then order intake, you if would we the would coming maybe were It acquisitions out running Nadella ago, forget, up have take QX. quarter down we we had the Phil. But looks in a

did out then prompted and bit distribution It the look that for saw -- certain a came internal the rest in year of rippling see off-highway as and on really in China, through there for full sectors, growth and outlook June as to sales close very in the to we which the which slight of or as a in take those May of energy slightly order in the lower anticipation well translated the deceleration then down sales our a said, the as the although where year But Rich a quarter as deceleration broad expectations. the was work shift little well. slower to we and is inventory us as quarter, all the renewable intake into well, reductions

they're organically message be the We said the not comment more were would June for second the from -- and It and the of May a We to have was quarter And looking the to the X% flat off up was of is at what -- is Phil second customers half. July. X%. down expected It significantly. in on little more orders sequentially.

is -- to quarter, and flattish we expect it be pretty second close So the flattish. to it was

with push $X why to or guidance, the you relates chance it a $X.XX table? do is end there's the towards as low see enough low And I'm end pretty that cut that curious, is left, headwinds not at two qualitatively off small. the the the quarters people just real Yeah.

the it account economic to which we're then really factors We the reduction half yes, the know sort into going be. of And over in inventory was a really No, to what -- I that's arguably uncertainty. back would us trying say, And the bit well could Steve, as it see call at maybe just this little really it we a is $X.XX it. wider, in anticipating year. range precisely don't takes of obviously, point year as

So over of rest and the line organic fence half. then enables the the the course sort in the the to the range around to bottom the line and us that the growth second expect on what of then put really -- over of translated year really just a we top

So I our X this at the $X.XX uncertainty. best midpoint a given of that like side of felt point to estimate put (ph) sort was and think the range on we each

think the I'd take on organic markets end comment the back the we to out deal term, think wouldn't back if the we there shot like if on didn't you we looks growth. range, of want had it to have and you to I And and in seven years. we go take have put Another us. -- high good short give it, with Certainly, achieving certainly five-year we I make eight it and also slide But equally good at hit a to it. performance, and the what

continue couple are a for real we've organic in we're really, as to things adding riding the look to longer initiatives We're inventory And positive. organic really M&A. and well And correction markets think an it's And not that. here. revenue really I the as through consistent when going of do been our mean, quarters, term, normal, to going these you -- be I just we're outgrowth at if

context. the Thanks. Appreciate

Thanks, Steve.

Thank you.

from from We Bank have our America. Michael Feniger of next question

taking price going cost realized Hi. stay I Thanks questions. my is first for positive. to

versus I and Just the strong consistent a that half? narrow? Or help that price pricing, was does QX so spread, us stay really comp. that does last understand cost realize for to that a second begin tough in quarter year

understand we exit growth as Is Thanks. still price positive? year. figure that help the that Just us

to positive pricing, But this it expect month moderates every price year. prior year would carryover, quarter, moderate some over the came less than of some -- price the on we on difficult I be but it on had we comps. does every And into year. -- saying Yeah. harder new more

to year start the that but next as well. we'll year on, So as bit also some moves carryforward less, a becomes have little

volume cost well mitigating some the have that's we raw side, of we of material, that. and On costs logistics headwind some but a improving now have as

would be And off last we be months. leveling largely costs to price several the they but positive have and So expect leveling to decline been still to cost off. not

the with think issue I comps tougher. mean I the price get the is, Yeah. obviously,

of the should moderates kind the through cost pricing be from benefit Mike. as there, year-over-year move the So benefit you year. But

And contribution X%. comment saying be and we on that year somewhere we came to land half, will price, say, it maybe bit in We between, solid question. a in on the X% thought directly. second So into no just we'd more the -- then a the little came

we obviously, still point. would at to albeit peak high, prices, we're input in over at this getting customers this And pricing the holding X% pricing. levels. expect -- with year raising We're remain point, come off for And costs pricing, are

is marketplace. risk we're material see and price pricing price still don't in we holding well, as the And this So any of I said, year. getting downs

getting the we then we that shutdowns operating Well, initially self-help chain the then problems. pandemic and side. cost most would hit, experiencing the the and say we probably started efficiently I since supply we are are -- today and from on there, have

So to we importantly, have that focus -- chasing the issues. versus are we chain excellence operating we're have more back effectively. relentless And we supply I on more think operational

feel I we're quite haven't standpoint about for able at from So an while. a where say good that and been to operating

up Thank high-single-digits. for realize China the I you. And on positive still is just renewables, year,

we're you're I'm or back high orders made And if on on to this You that seeing negative Are half? the publicized on could comments there's investments have as renewables. out with any issue some starting Steve going just future to that as orders. broadly Obviously, impact just curious the months. referred turn wind. next hearing for XX in earlier,

least generally three months typically and where we it's six backlog. at wind, area good of On have an

that we liked quarter softening we're saw degree seeing Again, the So the to more second would we the filling again, some decline, really in seasonal fourth but last normal not there. the -- was in what were strength and continue, have quarter. in the to expecting we

from would we looking negative, the expect. not or the to and what sequential to and fourth the quarter call is third but softening second third So the positive

expect any the why today. technology. reasons is not solar of do as relatively I Timken long-term one warranty changes industry we The very its sit new in the has of the or share That's outlook issues. had here wind It's well. to, there. companies think and conditions do it's technical valued we about very that that requires operating highly this Timken When That's solve you the things like the technology very loads one exposed in of and is can the demanding outlook problems.

it. So in going we remain term. believers it, long grow to And committed it's to

I just last year. down Mike, actually expense quarter versus And -- of -- would that was in anecdotally, expense warranty warranty Timken's the kind

knock company, quite wood, remains warranty good. experience the the So at on

off-highway you mining, Thank And Great. you cite if off-highway about would within could you step believe function there that. any noticed Is it particular vertical got quarter? more here construction. one I know for this. the you off-highway comment, you. I a Thank I just squeeze ag, includes in. change asked on that touched that this

hydraulic in -- then like and in other quarter, Yeah. construction mainly the And the talk whatnot, ag. construction the hydraulic I among in lower both a the whereas verticals, was about mining off-highway year-over-year, and of equipment, say quarter. sort little the, bit equipment we variety of it, there's It would were cetera. et always Mike ag, terms up mining, others, the in the in call probably elements of a and

some when customers, reductions would the that as then of the forward about think be than though, expect broad our look that. inventory as And far more from we we

the a year, specific down more, not to as rest we inventory as seeing bit we're conditions. impact we're the of It's really generally So levels hey, hearing any little I -- look any think we'd we want inventory. expect areas the that reflect to over course the take more to not current our us broadly of of

I us moved would customers selling it depending they're more be less And mid-single-digits forward. our they're doing or on up what inventory from It move. what at a with I as for said, not we to neutral. And huge to and add, to was it's looking common

the for take a out. basis, us to be they're for abnormal X neutral On up up off-highway, to to So volume be it looking be if would XX. in not or or base X customer inventory unit XX

Mike. Thanks,

remaining time. are any do this at There Sir, no you remarks? final questions have

and Brika, for us thank you, everyone, Yeah. joining Thanks, today.

further If you our call, this concludes questions me. any call. have and please Thank today’s you, after contact

quarter in participating for conference you today's second earnings Timken Thank call. release

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