TKR - Earnings call transcript Q1 2024

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Operator

Good morning all. My name is Lydia, and I will be your conference operator today. At this time, I'd like to welcome everyone to Timken's First Quarter Earnings Release Conference Call. [Operator Instructions] Mr. Elmblad, you may begin your conference.

Meghan Elmblad

everyone, first welcome, conference XXXX and call. Lydia, to quarter our earnings Thanks, Elmblad, Investor Manager The is Interim This Meghan of Timken Relations Company. for We you joining today. appreciate us

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

President call through and webcast Phil Chief access also feature download can The and the Timken Rich this are CEO, material Company's With Kyle; Fracassa, link. Financial the You me Officer. today earnings on our

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

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

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

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

have reconciliations We information the press non-GAAP and release included and financial materials. equivalent GAAP presentation its between in

The we and the or Timken copyrighted expressed written without consent, call. Today's is of any call prohibit by recording use, of any Company transmission portion

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

Richard Kyle

the our market you joining revenue thank morning, call. delivered margin with Meghan. Thanks, with and strong performance. conditions first industrial for organic a Timken Good in line and solid quarter

last by significant wind X% from the successful quarter, first diversity and Revenue last mid Our and year's energy year. that execution portfolio was the record results strategy. continue strength demonstrate China began in the Timken's to of decline in organically our down of driven

X%, wind. the wind up a wind, down talk moment. in of been excluding more I'll frame less have revenue impact organic would than about To

second to that attribute other quarter. of we start year. In sequentially markets X%, to around significant the aggregate, India, the year from which increased orders aerospace, in of and We revenue the half from were as of the didn't softness X% organic acquisitions that included first see or in down year. rail normal Across up While strengthening fourth down started any seasonality. Notable revenue were quarter. markets through all most services exceptions currency, than less Including that continued the was X%. last prior

quarter down margins cash last that generation highlight. in increase First remain contributing decline. the just was year, were were the several confident through like I'd cash flow and organic factors of to basis will the XX.X% XX points this There EBITDA margins revenue business. the weak, we seasonably despite from but the to of year

we improve the continues Timken This X includes made result which in year, greater have which completed to the in the performance both results last significant last in steadily portfolio, quarter. and the First, acquisitions the contributed diversify decade progress the and to over positively top to bottom lines. we

benefiting are other excellence and Second, our we operational from self-help in initiatives. investments

year year delivered Roller last synergies of one the recent is positive margins. to bearing helping cost and our the acquisitions, results. modestly Spinea, came well are The operation be for contributing price plant Bearing, as through less now have Margins up We year, X%. than we GGB successfully expecting price contributing Mix also is several full and the are synergies portfolio. including Acquisition to at year-over-year to across into Mexico margins. Our up example. also American performing ramped and are

well, positive. started we the We price year still expect full be and year to

particularly the in for eased. and of full inflation, the to pace as We price logistics cost also positive expect material be raw modestly year has

issues. We And levels. would out to to were each the We operating of better today operating of we've chains year, come than year and and a are inflation much I we years back as XXXX. say improving steadily when pre-COVID supply were that we've improve sequentially performance last quarter start ago. into we our supply And continued improved X been the last chain finally, COVID,

momentum have CapEx also great We spend initiatives. operational on focus excellence continuing our through this our and

course the $X.XX from was of organic We we a are our year's first both quarter. consistent year, of margins per of by cost the record last levels impact in share quarter adjust X% quarter. to marks allocation. reflect also continuing capital We through years earnings and of headcount during about and X% the excellent another lowered of the EBITDA decline down lowered $X.XX to as of XX% the demand. realities the our last Earnings strength XX.X% company diversity the in history, highest the portfolio, effective execution the in volume X% fourth face the the as and well of and

a biggest strong challenge was good more our we environment. expand after very on a significant markets, quarter to that a growth, to results. of years signaled start color the We first in wind our in decline mid The in year demand. To saw add energy challenging several the last I'll year market forward

at any our the our course return see improvement While record in reflect year was XX% this last down figure, from the the to in market doesn't share and wind level, full do The any year. situation to imminent but I year's demand over catalyst not revenue guidance has level. of the the quarter we won't specific growth, stabilized through

wind installed win market, our aftermarket year have of get improve. market in to comps appears the in not expect the and believe and the value ability of the a don't we reliable to of but global source Longer our long to wind our market We still the in energy, market third further of energy cost-effective technology wind the term. stabilized. profitably the of sequentially do growth easier erosion and in quarter, we in term, significantly potential servicing the the remainder the the Again, making base expect

that quarter and EBITDA point first the XX.X% issues a delivered wind associated out to like we in cost and decline margins. also in steep the still absorbed I'd revenue

Turning to rest the the of outlook.

continuing earnings We revenue. share, but the per off outlook of we're we increasing in a revenue the third for From of Sequentially, half the margins modestly the revenue, outlook year the seasonal to second year-over-year the are and fourth cautious flattish are take quarters. in half on remainder for QX and easier quarter, second year. then comps and a planning the perspective, declines the first significantly in for get

the our to revenue. continue operating inventory down We will levels with and costs adjust

are good general we We year. will the softness be deliver expecting, despite than we were done for the through year to in flow as markets to we the of and able capitalize cash expect expect market to step-up and deliver rest a margins pivot before. the we've stronger If

our longer-term Looking our portfolio, in we outlook, to remain invest growth in potential and the confident at and the for will growth margin initiatives. continue we

in For ERP digital and example, we're We for introduce first tools completed selling advancing upgrades new the our quarter X digital capabilities. distributors.

of of facilities recently and all across well, to to last we our announced the the optimize operation year drive also synergies acquisitions recent We are our footprint. several completed performing smaller and expansion revenue Mexico the manufacturing Six consolidation acquisitions. cost of and both continue

turn the remains pipeline world's one Fast to their and recently by equipment in customers Timken was application designs Our Customers innovative generation active as invest equipment. differentiating Company. advancing of next support engineering recognized in development as of continue most of and their being partner further Timken companies to as a that, as

Additionally, on and infrastructure our growth positioned spend, secular portfolio several trends, reshoring, today automation well is to capitalize defense, including sustainability.

M&A We through dividend, capital share and continue strong the to of CapEx, disciplined the will to allocation create also value and cash generation repurchases.

XXXX and debt Our with value to are factored our about levels range M&A. in, cash and 'XX continue flow are the we ample midpoint to have to of add a at targeted capacity capital allocation bias when through leverage

markets, CEO to it CEO leadership in and Timken's the track further of around welcome experience Board Mehta the growth leadership provide results is delivering committed in inherit on over Timken an He XX,XXX turn the as market-leading Phil, for a return Tarak for and franchise with the for is then, transition team shareholders by will future. that upcoming we supported also to a today creating leadership excited focused also we I world. proven We'll our as while value September. and skills assume that industrial a want growth. both delivering stakeholders. softness, September. a Tarak track will Until on in near about to record employees record significant is positioning all strong I for poised of market brings proven to remain transition. He information through global Tarak The to more executive the next Before is current comment

scaling remain and to Timken long-term the company's We achieving industrial as targets leader. financial in a diversified global committed

Phil?

Philip Fracassa

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

a environments. with which posted of year. the our Timken's and $X.X X.X% in summary review, presentation on business the financial Slide first last start the the of I'm We quarter For further of under materials XX power down to just billion earnings from solid quarter, going demonstrate through dynamic strength model revenue results, of

We quarter EBITDA per XX share at adjusted First year-over-year. quarter. XX.X%, margin delivered the adjusted points $X.XX down came basis earnings only of in in

Slide to XX. Turning

down at decline organic quarter than continued significant was last were year wind multiple energy, in experiencing sectors, would less down X%. the pricing most from take decline positive revenue Let's we a as X.X% quarter. performance. our closer offset our than wind the with been have lower more first by exclude look If energy sales across demand sales the Organically, in

Looking a while percentage divestiture top The growth at line completed negative contributed the of rest translation year, revenue slight to the walk. in we last net impact from was points of the one acquisitions quarter. X the of currency the foreign the X

excludes and impact. slide, side right-hand organic region, currency net growth the by On which can acquisition you of the see both

Let briefly each me region. on comment

against by that which XX%, while significant Asia first decline both region, was driven wind Americas, offset by notably strong double-digit Rich This strong up. rail about and down year-over-year, industrial were sectors we talked Pacific, on we earlier. led the services in in partially down X% In In lower by largest year's off-highway, and energy saw India, were China, were our quarter. aerospace demand. growth the Most last were

X% Western most we With Europe. particularly declines off-highway, posting largest EMEA was as up. in in the finally, And sectors lower, while and were industrial were general down services

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

the mitigated the and in strong which impact price/cost execution, of Our strong performance reflects quarter. volume organic lower margin positive

at see in volume, and decrease acquisitions. and dollars, lower mix, large favorable Looking the by driven can costs, logistics by and in price that of material part You was it manufacturing the adjusted favorable benefit lower offset EBITDA SG&A

also was a mix, was and of quarter drivers some positive as outperformed in line expectations. on exceeded in of the the businesses comment positive price This Let With pricing line in others both quarter. quarter. little in further key with on net the was our the respect Mix points XXX me higher-margin the several to our profitability in top basis segments.

higher material to lower and logistics slightly to in logistics situation Moving while shipping was costs. due the part in the year-over-year, Suez Material Canal. was

In cost improved productivity, despite by manufacturing, inflation. costs year-over-year that modest benefit a you see delivered we a lower inventory This continued change in labor favorable the driven quarter was and can targeted actions, utility impact.

at the reduced other and accruals align continued down line. year, lower by from the were Looking driven Costs of last This inflation. offset the with compensation spending more SG&A impact than to demand. incentive labor lower

I acquisitions net of both in on or on that and as acquisitions recent bottom finally, contributed point quarter performed lines. net And top $XX out million margin acquisition on our the the divestitures the revenue, of XX% acquisitions, well a EBITDA adjusted would

net period On of net is of GAAP share deal can expense last you compared includes a mainly Slide for per first $XXX which million to posted or diluted from items, current that basis of special $X.XX $X.XX on income quarter $X.XX year. The amortization we expense. see XX, comprised the

adjusted year. earned On per share we $X.XX per last compared share an to basis, $X.XX

below-the-line Let lower activity Interest items, buyback if was the the reflecting XX $X the will. me past we touch our net over over diluted expected, expense while in was on first you our X% some year-over-year quarter as million higher months. of count share

driven our XX%, of at up of geographic rate impact by adjusted last quarter items. unfavorable mix year, and for tax from other the in the Our earnings net came

finally, slightly up And in interest. last year noncontrolling depreciation was quarter the versus as expense as well

segment higher down down from were $XXX sales business Engineered our sectors, to sales Slide on Organically, In million, demand Bearing year. move let's the by lower first across driven Engineered with Bearings starting by XX. quarter, most offset XX.X% XX.X%, were results, last Now pricing.

side, were respect heavy the by truck versus industrial Off-highway, quarter sectors sector, decline performance the renewable largest auto all last comp last With aerospace and and general a in against year. the on to energy distribution and positive lower rail, while year. difficult were saw on-highway Other mixed. and up were

was revenue the of favorable. a TWB headwind all of acquisitions, net slightly was divestiture almost X%, to Currency just

$XXX Bearings XX.X% with impact delivered margin strong Engineered periods. in strong adjusted in the was million million from in quarter organic quarter last year, offset first $XXX price/cost We both and margin to execution favorable the the perspective. compared lower EBITDA very volume of performance of a margins as fully

on largest segment seeing X.X% were Industrial offset and from off-highway the quarter, market. were of with sales was Slide Organically, year-over-year, platforms Most let's as the XX. declined given X.X% lower to million, the Industrial Now demand exposure to first up Motion Motion our its last turn pricing. chain partially $XXX year. sales lower by higher decline In belts

aerospace MRO, While project and notably the other on revenue. other higher was services, on hand, up

delivered margin periods. perspective. while to as Industrial organic Industrial from and quarter Bearings, $XX in was the foreign benefit adjusted million, year, volume last translation million in by $XX offset improved EBITDA fully Acquisitions XX.X% segment execution from line, both contributed currency of Motion lower Motion Similar the the in XX% first a top we flat. margins price/cost, favorable acquisitions with of margins up over relatively was to flat was

XX. to Turning Slide

cash And was million. a due working cash free earnings, flow in and quarter. You was This CapEx, contribution other offset to lower lower taxes. below year items, can flow see last operating $X that by we $XX partially pension generated of higher million after capital, cash the

quarter first typically for flow. cash our The seasonally low quarter free is

up we move And the we as later, are step you'll year. maintaining the to flow full significantly cash year. our through flow see cash free of the expect rest We for as guidance

of debt with under and the $X Looking just at end relatively debt to both adjusted quarter net first the at billion ended balance year. sheet. from unchanged X.Xx, We the EBITDA of last net

targeted well range. leverage X.Xx our within Our net remains X.X to

on capital in Mexico expansions $XX allocation, spent and the which quarter, we Speaking of in India. million footprint significant CapEx includes

both quarterly consecutive we continue XXXth integrate are to reflecting XXXX. our paid performance synergy in the and operating we All also We acquisitions X dividend, well, and completed capture. contributing

For we capital a set. to cash acquisitions balance the continue free sheet of position allocation. execute Timken on our our profitable buybacks through to deploy and/or and XXXX, the strong growth in With capital to rest depending share intend and great opportunity towards disciplined strategy flow, smart remains

Slide a outlook full for XX. year let's to turn updated Now our the with summary on

to to This points a be in negative for the the of from to X% outlook first our our we for full per back in improvement increasing foreign Given outlook of X% the our outlook, quarter reflects for revenue, of basis performance to year, and positive on and Starting and previous versus earnings XX in outlook forecast as the total and to to is down rest a related revenue margins we're now are share compared planning organic sales net outlook our February. XXXX. year change initial the range change compared currency. a

change top a to down points revenue we X.X% we're expect as divestitures, is contribute the to the around around for respect based line no points outlook With is year. which still February. to acquisitions, headwind year's net currency, last full rates, basis to of the current of XX the from on There basis year XXX planning now M&A on for to for

outlook up midpoint. XXX industrial So basis lower several lower in prior a down partially at China a reflecting organically, offset be Europe. our improvement across automation guidance, X% in outlook and energy to from is expect for for the we by This now renewable revenue points slightly sectors,

recovery to X% a assumes take outlook implies as our year. to given of relatively limited view no visibility. second and the for in uncertainty macro continue half down inflection or range we cautious the This a The organic X%

midpoint line, the earnings outlook. now On $X $X.XX, in the up from $X.XX adjusted bottom we expect our to share range of previous per the at

from Our related margins our up midpoint, revenue prior still revised and in execution. guidance the but year will consolidated the strong the mix our outlook XXXX year, and adjusted full outlook on at margin from range implies expected down that EBITDA improved XX% high be last are

flow. Moving to cash free

outlook This The the midpoint of impact than which and capital over of income taxes, our year XXX% lower and offset reaffirming the net $XX approximately versus $XXX of last are year-over-year reflects should increase at on conversion an GAAP year. full performance working improved million. increase We million lower earnings. cash more represents

operational India, We are manufacturing for sales, and planning as other spend growth X% of excellence still CapEx with of initiatives. in Mexico at as around and the at most expansions footprint targeted well

finally, net anticipate million expense And we year. tax core adjusted of rate an the in the and for $XXX of full XX% interest range

quarter, delivered Timken performance. our the exceeded margin results solid strong first summarize, revenues and modestly in with expectations To that

Our XXXX to growth performance deliver to execute continues benefit driving we year, resilient focused this This while well, remain formal on to concludes profitable team beyond. and and our operational strategy our advancing excellence remarks.

open the line And we'll now for Operator? questions.

Operator

comes Our question of Instructions] Oppenheimer. first Bryan [Operator from Blair

Bryan Blair

the orders did Solid influence the outlook, QX distribution year, through versus we than moving And seasonality? of of certainly typical outcomes the influence start just half. relative inventory like current to expectations on the to channel how I'd back of can What's many range start view QX does potential and how that the And if given to in and stay off, trends industrial exposures? feared. better those needle demand?

Richard Kyle

Yes.

that flattish QX, we I nice but where a have visibility, which down in to expected, bit. think would down little normal and maybe stronger pretty than played pretty channel year-on-year. seasonality would I say is out from the modestly line, to Inventory markets a in to close distribution step-up the we have slightly in QX

and of with side inventory. doing do it hope stronger, we would less than the what OEM and cyclical much we hit side MRO although the So stay generally get is

to we're phrase modestly think trend of look down So played way to looking for continue largely you course year. the as forward, I through the would that out the be

Philip Fracassa

Yes. Bryan. other Maybe just couple of comments, a

less QX. modestly take So -- up neutral on to the you'll and the in destock, off order expecting today, outlook it year of the bit now, we full probably, the were QX for in market and share back Rich a the again back what still as down in a as note book did relatively February. that's as we did but to for as little of performance said, exists well We anticipating as than the back distribution,

as a outlook certainly driver well. the improved was that So of

Richard Kyle

Yes.

First quarter year and and easier comps the full fairly also is the was half. the get toughest in comp a then comp difficult QX second

Bryan Blair

Understood. year XXXX active is obviously and Appreciate the would it to deals, the in on color. feeling ask hear margin then X updates and an And model strategy quite was clearly quick going great I'm impressive. of your about how Nadella, deal for follow-up, M&A the was as current performance sustain update first be and that Lagersmit natural bolt-ons for your to momentum an successful your not for but all performance year? and team larger Des-Case is relatively deal on to this and a integration the potential cited pipeline

Richard Kyle

them be heavier would business. the Yes. to into ARB integration, Rosa There the linear and Sistemi which split groups. business, Maybe was into the I'll in X the Nadella bearing

lot So integration of a there.

those Des-Case of offset operational some the revenue Pros -- margins ] little You lot of will within on probably that but in impact in ahead year, Lagersmit, iMECH had but a element, fully later, a on sales lighter a cost, say integration. being the that have up very a the cost integrated more little cost more management cost and by there and gone look teams volume and I'd a less those that was [ year later heavy play, of as ARB, teams, well, and curve Nadella have be largely are space, the which but unless with well, integrated, a with of of improvement the negative significantly

capital and shorter really us Some the well. up. and well equipment first market OEM where held tend with better of good that large cycle. quarter markets for as Again, diversification headwinds. as But markets, side than very Des-Case Lagersmit, again, say the I'll revenue we on serve as had market be different mix aftermarket a to marine

We've nothing but was I comments, this focused bolt-ons M&A. would we XX at we here XX acquisition The or are completed somewhere reason We to wouldn't the second capacity do years to And and as between think a pipeline. able street, the it. I outlook. that in to part nothing still tuck-ins. and as to active my bias commit for an certainly primarily have an we report, year, to in no extend to of May every And question said be point. We sit but have that think, we on that

Operator

Our next KeyBanc. comes question from Barger Steve of

Steve Barger

congratulations. Rich,

offer. all finally Northeast You'll Ohio has have that to to time explore

Richard Kyle

Steve. I you me. look Thanks, hosting to forward

Steve Barger

Anytime.

up how a of the being we down. to maintain a of however growth sustainability automation, You environment. is I'm a percentage growth talked growth reshoring like portfolio secular. of you year, secular what or environment just revenue despite about current margin sense the in trying helped next in facing get diversification drivers low revenue end if low renewable, define

Richard Kyle

Yes.

as don't have that spend renewable large very experiencing off-highway secular down as lot of confident me, space, still wouldn't I global all a think we chart there modest largest the trend the think our The but I close they're year offset to pie -- in of market we've cyclicality say in was there. are customers. on our last off-highway. of I market, our trend of behind. I And markets infrastructure pretty automation, I but from a and enough a covers seen there's think a front are the There long-term

I said side we markets in XX%, out newer really on the typically when believe of defense was north the growth, is right during front It well. not a up was -- particularly sits, yes one Phil. of for us have high contributor the had really good chart COVID holds in the market but XXXX I you, then And

Philip Fracassa

Yes, XX%. about it's

Richard Kyle

think.... I or mean I Yes. XX%..

Philip Fracassa

and we the and beverage, activity a diversify infrastructure it's indirect now, frankly, momentum term mention positive I not food -- feel energy, industrial talked long market a standpoint, a isn't was done newer direct passenger just work really think a we the going rail really about renewable, which and but strong the to Steve, for we quite markets add, to from automation, to be that marine, aerospace, and certainly market, across will green services market just we've us. the right

feel improving diversification each do, will is us quite deal and year I helping we next think year the probably like as So with frankly, us is help this do we well. and

Steve Barger

the So if back trying without just you clarify, to going think about just step wind portfolio we and you're China IP. think in forward to from to outgrow predict industrial production, position a

Richard Kyle

certainly our I outgrow if it out been be look XXX-plus forward think over points. to would from at It's Yes. organic. and basis objective strip And to you XXXX

I been close think that. to we've pretty

Steve Barger

sitting risk one, the flat organic last we or is XQ you a the end in you year-over-year Or a lock basis confidence half? that an given and level about your in basically May, see there back basically XQ down see in or can that is markets? on your up mind mean is talk And comp here growth that easier how

Philip Fracassa

easier Yes. would we're given start sectors. comps look the really to be of back revenue high again year, an I organic for -- would several if flatten Steve, say you at the be for down organically perspective out second in from just likely quarter, to in and single then the to digits the look half outlook,

in down full I probably the the would of we're our year. organic and X% today going for negative general So sit still here QX, going think say or but up be not to trend to we're be

that's a we're planning of at digits what I But probably very and half Kind QX in down half in on bit but then the up won't flattening this single the first first little maybe on. much out or comment of half. second specifically weighted, high point, kind overall

Operator

next question of Our Castillo Morgan Stanley. from comes Angel

Unknown Analyst

Kris This ] [ is on Angel. for

think a Slide outlook markets. you of end for X, number I on your changed

down mid-single single mid-single So from to digits. from automation down neutral and digit high digits down to heavy industries were

you that might can us that the like more things So be? are those underlying what help unpack drivers

Philip Fracassa

project to gas. QX we oil modestly And question. and heavy pretty the industries, markets QX. respect for like to did in respect were continue Sure. -- in just metals and good thanks down With With we see in spending

the in quarter cycle. heavy performance down improved mid. the industries of so tends from for the move did mind, it given And outlook to to first rest a slightly year, down Keep probably we be and late

So we down do coming now, right stand as then we backlog there. see

inflection of the the So year. anticipating we're rest not an there for

down we'd expect less more to to full be So kind the in it or with year, down it for be still in line what of QX. was

the Europe mainly automation, to slight and move count for a there, to I points ] one would from it basis hundred move couple was [ say a of Relative driven of enough is just off very Western pretty business situation A soft, of just Western other, that Europe. OEMs. weak remains in automation that have the the we in European And big pretty chunk Western serving overall. to

on win moved to will, versus would just basis if have side, the February. just were and been the it then rail points the we improvement it moving So aerospace but the with, outlook down but the begin slightly, probably with distribution biggest markets moving drivers of industrial over further main you XXX probably the lower we on positive services have today took in for left was negative the It renewable to even left, energy. given back far over,

Richard Kyle

industrial earlier. little a And about moved we X bit, and then that talked distribution up

Unknown Analyst

free flow. on very Yes. helpful. cash And That's also

I free raised outlook cut flow unchanged? the cash was earnings think you by why

Philip Fracassa

Yes.

we the as receivables have we I may revenue hold when you -- higher up don't higher think typically out let's with inventory slightly you slightly know, higher revenue. higher slightly it little a guide And on capital, view less as or take took part, just carries need it the result. outlook working on -- to a bit was a our may little take a really

really So more capital of puts dynamic. takes the and it sales, was the of working

in minus about a roughly just to million, meaningful back the up and first or and felt QX I would it. even expect Like very plus talk QX, we a seasonally a it $XXX low, while so frankly, nice step And year. the holding confident of the then was range improvement half but said, quarter

of we environment. north actually at XXX% of at type north of that what of net is level, And this XXX% target income, net income, GAAP GAAP typically which of would market

Operator

Chris Instructions] question Loop from next Our Dankert Capital. comes of [Operator

Christopher Dankert

I guess, forward SG&A really on as just nice you what pulled of Maybe kind bit basis? go still Maybe there, is detail of any start leverage to kind expecting on on what a the quarterly should of for go could year front. kind be we more you? the just available comments here you we little what into a to SG&A here

Richard Kyle

I would from self-help I'd our efficient, say, a any significant we some of targeted capture some there of outside say reducing overhead, then complexity, the so getting acquisition multiyear done of us again, year starting to more yield targeted haven't systems reduction. taking But cetera. ago digital certainly to that Yes, the number reducing and really on et things attrition, out have, we continues areas, integration benefits campaign or

than So run X motion level I business. the most say generally SG&A would we segment partially those look acquisitions structurally combination offset the at of of higher bearings the the a industrial and

more SG&A, pretty we've done we've job been higher as than margin mixing good higher So generally last well a year gross towards offsetting that. a but structure,

Christopher Dankert

should given we're But on Got off? pretty be to that mix gross in declines there. it. think similarly fall margin then huge I that comments year-over-year from the some gross assume, outperformance Got played some a mix And perspective seeing down any that of given still XQ, how huge margin. pretty it. again, about just volume driver Obviously, just on

Richard Kyle

then inventory QX, flattish little looking we're inventory as through -- course QX in looking lower from to be QX revenue through or it and takes bit we I a some. and inventory some to Certainly, for the year, Yes. QX, the inventory be to -- of lower certainly in of hold built and we'd said, out

So from have guide standpoint, a and been pure for QX volume our year. would the the peak

in I other the gross through markets. all and starting quarter. conditions a days of getting 'XX, from from been this to the and margins, think of supply as last back challenges lot and of into this my operating both you difficult better part and lot first early the 'XX year labor a of then mentioned I the tight look thing COVID early at labor chain at least COVID through steadily very We've comments, challenges of in

that the get year than because the better were tougher of were fourth year. still we're advancing. on of in first comps goes actually of is last quarter downside we quarter as The our But we in cost last year the

I levels on it. off focus So think a we've the pace probably a bit, good little got really but

be got in. we've some of most built So it would seasonality. story, of a But volume that

Philip Fracassa

a gross standpoint. mention the Yes. I'd up to on will margins, would be mix other only the gross acquisitions margin from Chris, And thing tend us

EBITDA a a because have we'll the on They acquisition in may fragmented, typically mixes accretive said, QX, still run little SG&A margin standpoint. I again to little some businesses us nice up gross a would higher more fragmented. else, everything which line. from So but But be tend benefit Those they're agree Rich with.

be be high digits. And down to inventory to single as talked and flattish other to then then in QX, Organic sales EPS single down high the line. mid- year-over-year be I and would to the would on things. factors we said, on about would would decline Rich expect relative relative And other all down top just margins the digits revenue imply and That sequentially. expected

Operator

questions this remaining no are There time. at

for So to remarks. Ms. I'll back the turn any closing Meghan call Elmblad

Meghan Elmblad

joining you, Lydia, Thanks, us and thank today. everyone, for

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

Operator

Timken's for Thank you in Call. Conference First Quarter Earnings participating Release

disconnect. You now may

The Timken Company (TKR) 30 Apr 242024 Q1 Earnings call transcript