 St. Regis
- NYC
Feb. 14, 2012
Exhibit 99.1
TIMKEN ANALYSTS
’
DAY |
 TIMKEN
ANALYSTS’
DAY
Steve Tschiegg
Director –
Capital Markets and Investor Relations
Feb. 14, 2012 |
 3
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 Private Securities
Litigation Reform Act of 1995. In particular, the statements related to Timken’s plans, outlook, future financial
performance, targets, projected sales, cash flows, and liquidity, including the information
under the headings “Looking Forward”, “Key Takeaways”, “2012
Outlook Estimates,” “Sales,” “Earnings Per Share,” “Free Cash Flow,” “Capital
Spending,” “Pension,” “Net Debt,” “Liquidity and Debt
Maturity”, “Return on Invested Capital” and “2012 Capital
Allocation Highlights” are forward-looking. The company cautions that actual results
may differ materially from those projected or implied in forward-looking statements
due to a variety of important factors, including: the company’s ability to
respond to the changes in its end markets that could affect demand for the company’s products; unanticipated changes
in business relationships with customers or their purchases from the company; changes in the
financial health of the company’s customers, which may have an impact on the
company’s revenues, earnings and impairment charges; fluctuations in
raw-material and energy costs and their impact on the operation of the company’s surcharge mechanisms;
the impact of the company’s last-in, first-out accounting; weakness in global
economic conditions and financial markets; changes in the expected costs associated
with product warranty claims; the ability to integrate acquired companies to achieve
satisfactory operating results; the impact on operations of general economic conditions, higher or lower raw-
material and energy costs, fluctuations in customer demand, and the company’s ability to
achieve the benefits of its ongoing programs and initiatives. Additional factors are
discussed in the company’s filings with the Securities and Exchange Commission,
including the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2010, quarterly
reports on Form 10-Q and current reports on Form 8-K. The company undertakes no
obligation to update or revise any forward-looking statement.
This presentation includes certain non-GAAP financial measures as defined by the rules and
regulations of the Securities and Exchange Commission. A reconciliation of those
measures to the most directly comparable GAAP equivalent is provided in the Appendix to
this presentation. FORWARD-LOOKING STATEMENTS SAFE HARBOR AND
NON-GAAP
FINANCIAL INFORMATION
|
 Topic
Presenter
Time
Welcome
Steve Tschiegg
1 p.m.
Director, Capital Markets & Investor Relations
Strategic Update & Review
Jim Griffith
President and Chief Executive Officer
Mobile Industries
Rich Kyle
President -
Mobile Industries and Aerospace & Defense
Aerospace & Defense
Rich Kyle
President -
Mobile Industries and Aerospace & Defense
Process Industries
Chris Coughlin
President -
Process Industries
4
AGENDA
|
 Topic
Presenter
Time
Break
Approx.
2:30 p.m.
Steel
Sal Miraglia
President -
Steel
Financial Review
Glenn Eisenberg
Executive VP -
Finance & Administration
Q&A
Presenter Panel
Program Concludes
4:30 p.m.
5
AGENDA
|
 S
TRATEGIC
U
PDATE
&
R
EVIEW
TIMKEN
ANALYSTS’
DAY
James W. Griffith
President and Chief Executive Officer
Feb. 14, 2012 |
 Leader in
friction management & mechanical power
transmission
reliability for diverse markets, including:
Established in 1899
Headquartered in Canton, Ohio
2011 sales: $5.2 billion
Global footprint
with
operations in 30 countries
21,000 associates
•
Aerospace
•
Mining
•
Energy / Wind
•
Rail
•
Construction
•
Truck
•
Automotive
•
Aftermarket
7
TIMKEN OVERVIEW
|
 Note:
Based on 2011 sales. Steel segment sales includes $120
million inter-segment sales.
Process
Process
Industries
Industries
Steel
Steel
Aerospace
Aerospace
& Defense
& Defense
Mobile
Mobile
Industries
Industries
8
Aerospace & Defense
--
Diversified into transmissions,
and aftermarket
Sales: $0.3 Billion
EBIT Margin: 2.3%
Process
--
Global growth
beyond bearings, diversified,
strong aftermarket
Sales: $1.2 Billion
EBIT Margin: 22.6%
Steel
--
High-performance,
custom steels
Sales: $2.0 Billion
EBIT Margin: 13.8%
Mobile
--
Transformed
portfolio, more aftermarket
Sales: $1.8 Billion
EBIT Margin: 13.7%
T
HE
T
IMKEN
C
OMPANY
T
ODAY
|
 The more extreme the engineering challenge, the more
grueling the conditions, the more value
we bring to customers. 9
T
HE
T
IMKEN
C
OMPANY
T
ODAY
|
 10
GROWING WHERE END-MARKETS CONNECT |
 Enhance
existing products and services
Leverage technology
to create value
Capture lifetime
of opportunity
Structure portfolio
for value creation
Fix/Exit under-performing
areas
Refine lean operating model
Improve efficiency and
reduce cost structure
Increase agility
Deliver greater profitability
Attractive industrial markets
Developing geographies
Channels, services,
distribution/aftermarket
11
THE STRATEGY IS
WORKING |
 Record
Sales Record Profitability
Record New Products
Record Customer Service
Record Safety
More Profitable Portfolio
Strategic Acquisitions
Increased Industrial Aftermarket
Growing End-markets
Global Expansion
12
KEY ACCOMPLISHMENTS IN
2011 |
 Markets
Products
Geographies
People
Performance
13
A
M
ULTI
-F
ACETED
T
RANSFORMATION
|
 14
Reflects $1 billion in Timken aftermarket sales in 2011, up 500%
since the year 2000.
MARKETS: INDUSTRIAL AFTERMARKET
A DECADE OF GROWTH |
 15
Reflects $500 million in Timken energy end-market sales in 2011, up 270% since the year
2000. MARKETS:
ENERGY DECADE OF GROWTH |
 16
PRODUCTS:
DIVERSIFIED PORTFOLIO
|
 17
Timken Boring Specialties
Timken Boring Specialties
Of Timken’s Steel segment, 30% of sales are from new products or new customers introduced
within the past 5 years. PRODUCTS:
DIVERSIFIED PORTFOLIO
|
 18
GEOGRAPHIES: E ASIA
GROWTH Ballarat
Brisbane
Melbourne
Perth
Sydney
Calcutta
Bejing
Hong Kong
Seoul
Yokohama
Yantai
Moscow
Pune
Bangalore
New Delhi
Shanghai
Bombay
Jamshedpur
Manufacturing Plants
Innovation Centers
Distribution Centers
Offices
Singapore
2000
XPANDED |
 19
New Delhi
Kolkata
Gurgaon
Nanjing
Zhengzhou
Xi’an
Mysore
Chongqing
Shenyang
Bejing
Tianjin
Guangzhou
Seoul
Yokohama
Nagoya
Chennai
Moscow
Pune
Bangalore
Jamshedpur
Chengdu
Manufacturing Plants
Innovation Centers
Distribution Centers
Offices
Bangkok
Jakarta
Hanoi
Ballarat
Brisbane
Melbourne
Perth
Sydney
Wuhan
Taipei
Kuala Lumpur
Hong Kong
Yantai
Singapore
Shanghai
Wuxi
Xiangtan
Changsha
GEOGRAPHIES: E ASIA
GROWTH 2012 XPANDED |
 20
PEOPLE:
KNOWLEDGE DRIVES
VALUE |
 21
PERFORMANCE
:
D
ELIVERING FOR
CUSTOMERS
|
 22
PERFORMANCE:
DELIVERING ON SAFETY
|
 Earnings Per
Share
Net Sales
($ in Millions)
23
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
($1.00)
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
RECORD PERFORMANCE: DELIVERING ON SALES & EARNINGS
EPS assumes dilution. 2003
includes Torrington acquisition as acquired February 2003. Historical results exclude the discontinued
operations of Latrobe Steel (2006 divestment) and the Needle Roller Bearings (NRB) business (2009
divestment). NRB discontinued operations for 2003 and 2004 are based on internal estimates.
Note: |
 24
WHAT’S
NEXT
|
 Philadelphia
Gear 25
N
EXT
:
E
XPANDING
P
RODUCTS AND
S
ERVICES
|
 26
NEXT:
EXPANDING GEOGRAPHIES
|
 27
KEY T
AKEAWAYS
Delivering on strategy; more diversified and
stronger today
Performing at a higher level;
well-positioned for
the future
Applying knowledge to create substantial value
serving growing, global end-markets
|
 Rich Kyle
President –
Mobile Industries and Aerospace
Feb. 14, 2012
M
OBILE
I
NDUSTRIES
TIMKEN
ANALYSTS’
DAY |
 2011 Sales:
$1.8 Billion
Premium bearings, lubricants, seals and
aftermarket services for mobile
equipment and vehicle applications
Percent of Total
Company Sales
Market Sales
Geographic Sales
Aerospace
Aerospace
& Defense
& Defense
29
U.S.
56%
Europe
19%
Asia
11%
Latin
America
6%
ROW
9%
Process
Steel
Mobile
34%
Off-
Highway
26%
Light Truck
26%
Heavy Truck
13%
Rail
13%
On-Highway
Aftermarket
13%
Passenger
Car
9%
MOBILE INDUSTRIES
OVERVIEW |
 Drivetrain,
wheel ends Rebuild kits, wheel ends,
services, unit bearings
Axles, transmissions,
wheel ends
Gear drives, axles,
wheel ends
Drivetrain, wheel ends,
services
30
GROWING,
DIVERSE
MARKETS |
 Bearings
Engineered
Chains &
Augers
Seals,
Lubricants
Services
31
D
IFFERENTIATED
S
YSTEMS AND
C
OMPONENTS
|
 Sales of $1.8
billion, up 13.7% from 2010 Sales increase driven by higher demand and
penetration in the off-highway, rail and
heavy truck sectors
Achieved EBIT of $243 million, up 17% from 2010
Record EBIT margin of 13.7%
Industry leading service levels
32
$1,772
$1,245
$1,561
$1,769
2008
2009
2010
2011
$9
-$86
$208
$243
2008
2009
2010
2011
0.5%
6.9%
13.3%
13.7%
2008
2009
2010
2011
-
Net Sales
($Millions)
EBIT
($Millions)
EBIT
Margins
•
•
•
•
•
•
•
•
Top line growth, record profitability and
strong cash generation
Improved customer relationships with
excellent customer service and support
Continued portfolio shift toward attractive
markets, winning new business while
managing exited business
2011 Performance Update
Key Accomplishments
R
ECORD
F
INANCIAL
P
ERFORMANCE
|
 Strategy and
Approach •
Provide high-value power transmission products and services
focused on demanding mobile equipment and vehicle applications
to OE and aftermarket channels globally
Strategic Imperatives
•
Capitalize on mining, agricultural and commercial
transportation demand
•
Improve mix in end markets, channels, geography and products
•
Manage exited business
•
Industry leading customer service and technical support
33
STRATEGY IS WORKING
|
 2005
Sales 2011 Sales
34
Off-
Highway
16%
Light Vehicle
Systems 54%
Heavy Truck
13%
On-
Highway
Aftermarket
9%
Rail
8%
Light Vehicle
Systems 35%
25%
On
Highway
Aftermarket
14%
Heavy Truck
13%
Rail
13%
S
TRATEGY
:
I
MPROVING THE
M
IX
-
Off-
Highway |
 •
Extensive portfolio of differentiated products for mission
critical and demanding applications
•
Additional capacity for growing markets
•
Leader in customer service and technical support
The Future of Mobile Industries
•
Leverage strong demand across global mobile markets
•
Low to mid double digit operating margins
•
Improve mix in off-highway, rail and mobile aftermarket
35
L
OOKING
F
ORWARD
:
M
ORE
G
ROWTH
|
 Population
Growth Infrastructure Growth
Mobile Equipment Growth
•
Mining
•
Heavy Truck
•
Rail
•
Agriculture
•
Light Vehicle
36
Mobile Equipment
Aftermarket Growth
MARKETS
TARGETED FOR
GROWTH
|
 •
Demand for mining equipment projected to
grow
at
8%
CAGR;
sustained
through
2020
*
•
Mining equipment manufacturers investing to
support growth
•
Equipment rebuilds drive large aftermarket
37
*
Source: Freedonia Industry study World Mining Equipment Jan. 2012 #2840
FOCUS ON MINING
|
 Haul
Truck •
Equipment Life: 20+ years
•
Typical Bearings Cycle: 3-5 years
•
Lifetime Opportunity: ~$500,000
Longwall
Shearer
Electric Shovel
•
Equipment Life: 30+ years
•
Typical Bearings Cycle: 4-8 years
•
Lifetime Opportunity: ~$2.4 Million
•
Equipment Life: 20+ years
•
Typical Bearings Cycle: 0.5-1.5 years
•
Lifetime Opportunity: ~$450,000
Crushing ,
Screening and
Conveying
•
Equipment Life: 20+ years
•
Typical Bearings Cycle: 4-8 years
•
Lifetime Opportunity: ~$200,000
38
L
IFETIME OF
R
EVENUE
O
PPORTUNITY
|
 39
P
OPULAR
M
INING
E
QUIPMENT
|
 •
Record financial performance; strong cash generation
•
Robust market demand across all global mobile markets
•
Focused on products, applications, and markets where customers
value our engineering, manufacturing and service capabilities
•
Strong growth in rail and off-highway markets as well as on-highway
vehicle aftermarket
What’s Next
What’s Different
Today
•
Continued strong financial performance
•
Sustained leadership position in target markets
•
Diversified products and markets
40
M
OBILE
I
NDUSTRIES
:
K
EY
T
AKEAWAYS
|
 Rich
Kyle President –
Mobile Industries and Aerospace
Feb. 14, 2012
TIMKEN
ANALYSTS’
DAY |
 Percent of Total
Company Sales
Market Sales
Aerospace
Aerospace
& Defense
& Defense
6%
6%
•
Flight critical components and services for
aircraft engines and transmissions
•
Precision bearings, assemblies, encoders, sensors
for the motion control market
Geographic Sales
42
2011 Sales: $324 Million
U.S.
78%
Europe
12%
Asia
6%
4%
ROW
Process
Mobile
Steel
Defense
46%
Civil
43%
Motion
Control
11%
AEROSPACE
A
ND
DEFENSE OVERVIEW
|
 Commercial
Bearings, replacement
parts, bearing repair
Guidance
Bearings, Sensors
Machine Tool
Precision bearings,
OE and aftermarket
Motion & Position Control
Bearings, replacement
parts
Rotorcraft
Bearings, engine and
drive train, overhaul,
replacement parts,
bearing repair
General Aviation
Engine overhaul,
replacement parts,
bearing repair
Rotorcraft
Transmissions,
bearings, drive trains,
replacement parts,
bearing repair
Fixed Wing
Bearings, replacement
parts, bearing repair
Military Ground
Equipment
Powertrain,
transmissions,
positioning bearings
Submarine
Bearings, guidance
systems, sensors
43
GROWING, DIVERSE MARKETS |
 44
Bearings
Transmissions
Encoders and
Sensors
Complex Parts
Services
DIFFERENTIATED SYSTEMS A
COMPONENTS
ND |
 2011 Net
Sales: $324M Top 10 represent 38% of net sales
45
-60
Rolls Royce 250
GE CF6
Boeing Chinook
Sikorsky CH-53
GE CF34
Boeing
Apache
H
PWC PT6
Sikorsky
Sikorsky
Other 62%
Other 62%
Sikorsky S-76
V-22 Bell Boeing
A
EROSPACE AND
D
EFENSE
P
LATFORMS
|
 2011 Net
Sales: $324M 46
Original
Equipment MRO
40%
Original
Equipment
30%
Aftermarket
30%
AEROSPACE
&
DEFENSE
SALES
BY
CHANNEL
|
 Key
Accomplishments Positioned business for improvement
Executed system and process improvements
Strengthened customer service and business
relationships
Targeted growth to drive mix
2011
Performance
Update
Sales of $324 million slightly lower than 2010
Sales decrease resulting from defense-related
weakness
EBIT down on lower volumes, unfavorable sales
and execution
EBIT margin of 2.3%
47
$412
$418
$338
$324
2008
2009
2010
2011
Net Sales
$45
$65
$17
$8
2008
2009
2010
2011
10.9%
15.7%
4.9%
2.3%
2008
2009
2010
2011
EBIT Margins
EBIT
A
EROSPACE
A
ND
D
EFENSE
($Millions)
($Millions) |
 Strategy and Approach
Provide a globally diverse portfolio of high-value parts, integrated
assemblies and service capabilities focused on growing platforms
through OE and aftermarket channels
Leverage strong commercial and improving general aviation markets
Navigate uncertainty in defense markets
Improve mix and execution
Advance leadership in intellectual property, service and execution
48
S
TRATEGY
I
S
W
ORKING |
 Improved
execution and service, strong commercial markets, a bottom in defense demand, and
growth opportunities focused on profitable products, markets and channels
What’s Next
What’s Different
Today
Flat revenue and weak EBIT performance in 2011, due to execution, mix,
and a weak defense market
Strong execution combined with improving markets and targeted channels
lead to growth and a return to attractive profitability
49
AEROSPACE
A
ND
DEFENSE:
KEY T
AKEAWAYS
|
 Chris
Coughlin President –
Process Industries
Feb. 14, 2012
PROCESS INDUSTRIES
TIMKEN
ANALYSTS
’
DAY |
 2011 Sales:
$1.2 Billion Precision-engineered bearings and
mechanical power transmission products
for diverse markets.
Percent of Total
Company Sales
Geographic Sales
Market Sales
Aerospace
Aerospace
& Defense
& Defense
51
Process
24%
Mobile
Steel
U.S.
43%
Asia
26%
Europe
18%
Latin
America
7%
ROW
6%
Aftermarket
64%
Service
9%
Metals
8%
Machinery
7%
Energy
6%
Gear
Drives
5%
Other 1
PROCESS INDUSTRIES
OVERVIEW |
 Power Gen
Coal: Pulverizers,
ball mills, pumps
Mining:
Shovels/draglines,
material handling
Oil and Gas:
Top drives, mud pumps
Wind Energy:
Main shafts, gear boxes
Cement:
Vertical rolling mills,
crushing, screening
Metals:
Casters, flat products,
long products
Gear Drives:
Industrial and planetary
gear boxes, geared motors
Pulp and Paper:
Chippers/de-barkers,
dryer, calendar
Food and Beverage:
Peelers/dicers,
sorting equipment
52
RAPIDLY GROWING, DIVERSE MARKETS Creating customer value by:
Focusing on challenging applications in tough industrial environments
Offering differentiated systems and components critical to the reliable
operation of complex machinery |
 Bearings
Engineered
Chains
Gears
Services
53
DIFFERENTIATED SYSTEMS AND
COMPONENTS |
 2011 Performance
Update Key Acomplishments
54
$1,166
$809
$903
$1,245
2008
2009
2010
2011
Net Sales
($Millions
$215
$73
$134
$282
2008
2009
2010
2011
EBIT
)
18.4%
9.0%
14.8%
22.6%
2008
2009
2010
2011
EBIT Margins
Record $1.2B sales, up 38% from 2010 Record 22.6%
EBIT margin End-user focus leading to aftermarket growth Asia sales
growth and geographic expansion
New products and acquisitions
Break-through customer service levels
Value-based pricing
S&A control and inventory management
RECORD FINANCIAL
PERFORMANCE ($Millions) |
 Strategy and
Approach Strategic Imperatives
55
Focus on end-user value chain and needs
Continually penetrate end-user value chain with new products and services Utilize
strong distribution channels to maximize lifetime profit
Achieve a leading market position in Asia Pacific Compete
at original-equipment manufacturers level to drive the installed base
Drive product and technology diversification beyond tapered bearings PROVEN STRATEGY |
 Prioritized
efforts to serve the most attractive markets to Timken Percent of OE Sales in Target
Markets Power Gen Coal
Power Gen Coal
Mining
Mining
Oil and Gas
Oil and Gas
Wind Energy
Wind Energy
Cement
Cement
Metals
Metals
Gear Drives
Gear Drives
Pulp and Paper
Pulp and Paper
Food and Beverage
Food and Beverage
56
53%
79%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2000
2011
FOCUSED GROWTH IN DIVERSE
MARKETS |
 Percent of
Total Sales by Geography $0.40B
$1.24B
Asia
ROW
Latin America
Europe
U.S.
57
61%
43%
9%
25%
15%
17%
6%
7%
7%
5%
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
2000
2011
EXPANDING GLOBAL
P
RESENCE
|
 Product
Sales 2011: $1.24B
2001: $0.40B
TRB: Tapered Roller Bearings
SRB: Spherical Roller Bearings
CRB: Cylindrical Roller Bearings
HU: Housed Units
Other Bearings
Services
Non-Bearing Products
Non-Bearing Products
Services
Other Bearings
HU
CRB
SRB
Non-Bearing Products
Other Bearings
58
56%
56%
TRB
TRB
96%
96%
TRB
TRB
NEW PRODUCTS,
NEW OPPORTUNITIES |
 Differentiated
performance • Industrial focus •
Strong aftermarket •
Supply chain synergy
Sales/Timing
Product
Offering
Growth
Synergies
Sales: $85M
Purchase date: July ‘11
Sales: $100M
Purchase date: Oct. ‘11
2011 Sales: $23M
Purchase date: Sept. ‘10
Gear drive repair
Engineered chains
and augers
Mounted spherical roller
bearings and couplings
59
Capture lifetime of revenue opportunity Leverage distribution channel Opportunities for cross-selling and development of product lines Global expansion
NEW ACQUISITIONS,
NEW CAPABILITIES
NOTE: Sales for Philadelphia Gear and Drives reflect last 12-month sales at time of
purchase. Sales for QM Bearings reflect both Mobile Industries and Process
Industries sales. |
 Large-bore
Bearings On-time Delivery/ Stock-in Rate
Right product at the right place, right time=
Gains in market share + Premium pricing + Increased inventory turns
60
70%
87%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2011
8-
12
-6
0
1
2
3
4
5
6
7
8
9
10
11
12
2006
2011
4
39%
25%
2006
2011
Working
Capital
(%
of
Sales)
Large-bore
Bearings
Lead
Time
(Months)
EXCELLENT CUSTOMER SERVICE WITH WORKING CAPITAL DISCIPLINE NOTE: Large-bore
bearings include greater than 8 inch tapered, spherical and cylindrical roller bearings. |
 The Future of
Process Industries Extensive portfolio of differentiated mechanical power transmission
products and services
Expansive OE installed base to seed the aftermarket
Additional capacity for growing markets
Leader in customer service in mechanical power transmission
61
Aggressive sales growth >20% operating margins Leading position in focused markets with strong aftermarket opportunity L
OOKING
F
ORWARD
:
M
ORE
I
NDUSTRIAL
G
ROWTH
|
 Mechanical
Power Transmission Bearings
Tapered Roller Bearings
NOTE: Based on Timken’s internal projections and analysis of third party source
materials. 62
Chains, belts, gear drives, couplings,
brakes, sprockets, clutches, services,
condition monitoring, rebuild, repair
Spherical, cylindrical, housed unit, ball
EXPANDING
OUR MARKET SPACE
|
 New product
sales: 2011 YOY growth of
40-50%
Ample opportunity to
gain market share in
new products
Timken
Market Share
Based on Timken’s internal projections and analysis of third party source
materials. 63
Introduce and globalize
products and services
Invest in ASEAN, Latin
America, Africa, Russia
Grow in China, India
Increase capacity in
new products
NOTE: New product sales from cylindrical roller bearings, roller housed units and spherical
roller bearings. GAINING
SHARE: ORGANIC
GROWTH
|
 Acquisition
strategy NOTE: Based on Timken’s internal projections and analysis of third party
source materials. 64
Differentiated
mechanical power
transmission products
and services in
demanding applications
Products with broad
aftermarkets
Industrial services that
penetrate end-user
value chains
Leverage the Timken
brand and global
distribution
infrastructure
Strong financial returns
Chains, belts, gear drives, couplings, brakes, sprockets,
clutches, services, condition monitoring, rebuild, repair
U
NLOCKING
N
EW
S
PACES
:
I
NORGANIC
G
ROWTH
|
 Record sales
and EBIT stemming from a solid strategy and end-user focus in attractive
markets. Product line expansion; mechanical power transmission acquisitions;
excellent customer service; and greater market and geographic
growth/diversification.
Aggressive annual sales growth by gaining share in focused markets and
unlocking new mechanical power transmission opportunities.
What’s Next
What’s Different
Today
65
PROCESS INDUSTRIES:
KEY TAKEAWAYS
|
 Sal
Miraglia President –
Steel Group
Feb. 14, 2012
TIMKEN ANALYSTS’ DAY
STEEL |
 STEEL
GROUP
OVERVIEW
2011 Sales: $2 Billion
Percent of Total
Company Sales
Geographic Sales
Market Sales
67
Aerospace
Aerospace
& Defense
& Defense
High-performance alloy steel
Know-how to design custom solutions
Broad product line
Efficient supply chains
Passenger Car
14%
Light Truck
11%
Heavy / Medium
Truck
2%
Vehicular
Bearing Steels
1%
Oil and Gas
Drilling
17%
Distribution
General
13%
Aerospace &
Defense
2%
Agriculture
Machinery
1%
Mining
Machinery
3%
Industrial
Machinery
10%
Rail
3%
General
Industrial
10%
Industrial
Bearing Steels
6%
US 93%
Outside
US 7%
Process
Mobile
Steel
36%
Oil and Gas
Completion
7% |
 Seamless
mechanical
steel tubing
Special bar
quality steel
Value-added
solutions
450 grades of carbon and alloy steels
Well suited for power transmission applications
68
DIFFERENTIATED
SOLUTIONS |
 Steel
Applications Non-Timken
Bearings
Bearing Races
Fuel Injectors
Gun Barrels
Crankshafts
Energy Production
CV Joints
Transmissions
Gears
Fasteners
Hand Tools
Leaf Springs
Shopping Carts
Table Legs
Reinforcing Bar
69
LOW
HIGH
HIGH
THE S
TRATEGY
IS
WORKING |
 We build trust
by turning We build trust by turning
what we know about high
what we know about high
performance steels into
performance steels into
improved customer
improved customer
performance.
performance.
What are
What are
we best at?
we best at?
What are we
What are we
passionate
passionate
about?
about?
Offering differentiated alloy steels and supply chain solutions in attractive market
segments 70
What powers our
What powers our
economic engine?
economic engine?
T
HE
S
TRATEGY IS
W
ORKING
|
 71
Note:
EBIT is defined as operating income plus other income (expense), net; ROIC is calculated as
NOPAT/invested capital. See Appendix for reconciliation of ROIC to the most directly
comparable GAAP equivalent. ($ MILS.)
Timken’s Average Cost of Capital ~9%
Steel Segment
PROFITABILITY TRACK
RECORD |
 STRONG
PERFORMANCE
2011 Performance Update
Sales of $2 billion, up 44% from 2010
Higher volume, surcharges and pricing
High demand from energy and industrial
EBIT margin of 13.8%
Key Accomplishments
25 percent increase in shipped tons
Capacity improvements
Continued portfolio management
Customer service improvements
72
$1,852
$715
$1,360
$1,954
Net Sales
$281
-$63
$146
$271
EBIT
($Millions)
14.3%
-8.1%
10.8%
13.8%
EBIT Margin
2008
2009
2010
2011
2008 2009
2010 2011
2008 2009
2010 2011 ($Millions)
|
 73
Note:
ROIC is calculated as NOPAT/invested capital; see Appendix for reconciliation of ROIC to the
most directly comparable GAAP equivalent. Steel special peers are a
representative group of eight steel companies. The Timken Peers are comprised of 36 industrial
companies
from
the
S&P
400
index.
Capital
IQ
is
the
data
source
for
all
peer
companies.
24%
8%
12%
Timken Steel
Special Steel Peers
Timken Peers
ROIC -
One Year
11%
6%
11%
Timken Steel
Special Steel Peers
Timken Peers
ROIC –
Three Year
22%
11%
13%
Timken Steel
Special Steel Peers
Timken Peers
ROIC -
Five Year
18%
14%
13%
Timken Steel
Special Steel Peers
Timken Peers
ROIC -
Year
Ten
TIMKEN STEEL
PERFORMS |
 74
Actions/Tactics:
Pricing action
Cost reductions
Tube Finishing Line (IFL)
Expected Results:
Diversification/flexibility
Significantly improved
performance in downturn
P
ERFORMANCE STABILIZATION
Forge Press
Caster/Refiner
Portfolio management
Growth in attractive areas
Lower break even
Product differentiation |
 Mining
Rail
Passenger Car
Light Truck
Drilling Equipment
Production Equipment
Heavy/Medium Truck
Wind Energy
Completion
Farm Equipment
Vocational Truck
Horizontal Drilling
75
RAPIDLY GROWING,
DIVERSE M
ARKETS
|
 High
performance application Drill bits/hydraulic impact hammers
Drivetrains
Bearings
Strength Where It Matters For Mining
Transportation Motorized Wheel Drive System
Internal cleanliness
Consistent chemistry
Special steel grades
Small quantities and diverse sizes
76
T
HE
S
TRATEGY IS
W
ORKING
–
I
NDUSTRIAL
|
 Planetary Ring
Gear Unique rotary forging capability
Managed supply chains
Conserve capital
Unique finishing capability
Alloy development capability
Improved fuel economy
Forged Crankshaft
77
T
HE
S
TRATEGY IS
W
ORKING
–
M
OBILE
O
N
-H
IGHWAY
|
 Stator
Tubes Used in horizontal drilling
Helps rotor movement
More reliable, better product
Grade: Impact 7
Quench and temper tube
78
T
HE
S
TRATEGY IS
W
ORKING
–
O
IL AND
G
AS
|
 79
T
HE
S
TRATEGY IS
W
ORKING
–
O
IL AND
G
AS
|
 Positioning to
Serve Attractive Market Segments Large bar ultrasonic
Custom heat treat
Forge press
Capacity and productivity
enhancements
Organic Growth
Value-Add Initiatives
Value selling & pricing
International growth
Business portfolio
development
Inorganic Growth
Timken Boring
Specialties expansion
Asia value-add
Asia steelmaking
Operational Excellence
Tube finishing line (IFL)
Lean6Sigma /Cont. imp.
Customer service
Recycling business
80
L
OOKING
F
ORWARD
–
S
TRATEGY
R
OAD
M
AP
|
 Defend and Grow
Leadership Position in Large Bar Extend differentiation
business model
Increase capacity for
profitable growth
Grow international sales
Dampen financial impact
of economic cycles
Deliver cost savings
through yield and
productivity gains
Extending competitive advantage
81
Note:
Subject to ratification of a new collective bargaining agreement with the United
Steelworkers. LOOKING FORWARD – P ROPOSED
FAIRCREST INVESTMENT |
 Investment
Overview: Expected productivity improvement and cost savings
Increased capacity
Extend differentiation
Barrier to entry
Projected rate of return > 20%
82
Note:
Subject to ratification of a new collective bargaining agreement with the United
Steelworkers. LOOKING FORWARD – P ROPOSED
FAIRCREST INVESTMENT $225 million
proposed investment at Canton Faircrest Steel Plant Ladle refiner & new
large-bloom continuous caster Expected capacity increase of ~25%
Production commencement target in 2014 |
 83
Strong financial performance
Capturing value with differentiated offerings
Operational excellence
Demand for energy (oil, gas, wind)
Demand for raw materials
New product sales
Diversified markets
S
TEEL
:
K
EY
T
AKEAWAYS
Capital investment program
Pricing and continuous improvement
Value-added opportunities
Performing
Improving
Growing |
 Glenn
Eisenberg Executive Vice President –
Finance & Administration
Feb. 14, 2012
T
IMKEN
A
NALYSTS
D
AY
’ |
 Sales of $5.2B,
up 28% from prior year Driven primarily by strong demand across the company's
diverse industrial sectors, along with favorable pricing,
material surcharges and acquisitions
EBIT of $728M, or 14.1% of sales
Record EPS: $4.59, up 68% from prior year’s $2.73
Note:
See Appendix for reconciliation of EBIT to the most directly comparable GAAP equivalent.
85
Earnings benefited from improved demand, favorable
mix, surcharges and pricing, which more than offset
higher raw material and SG&A costs
Reflecting strong execution and operating leverage
2011 RESULTS
|
 2011 RESULTS Free Cash Flow a use of $70M
From operating activities after pension contributions, capital expenditures
and dividends
Includes $256M discretionary pension and VEBA trust contributions, net of
tax
Strong Balance Sheet
Cash position of $468M, or $47M net debt
Pension & postretirement benefits unfunded liability of $950M, up slightly
from prior year
•
Discretionary cash contributions were more than offset by negative
impact of year-end discount rate and low asset returns
Liquidity of $1.3B, with no significant debt maturities until 2014
Note:
86
Free cash flow is defined as net cash provided
by operating activities (includes pension contributions) minus capital expenditures and
dividends. Net debt is not a GAAP measure. Management believes Net Debt is an important
measure of the Company's financial position, due to the amount of cash and cash
equivalents. VEBA is in reference to the Company’s Voluntary Employee Benefit Association (VEBA) trust. See
Appendix for reconciliation of Free Cash Flow and Net Debt to the most directly comparable GAAP
equivalents. |
 2012 OUTLOOK ESTIMATES
Sales Growth
5 to 8%
Mobile Industries
Flat
Process Industries
8 to 13%
Aerospace & Defense
10 to 15%
Steel
5 to 10%
EPS
(diluted)
$4.90 to $5.20
Free Cash Flow
$80M
CapEx
$345M
Dividends
$90M
Pension/VEBA contributions (discretionary)
$150M, net of tax
Note:
Free cash flow is defined as net cash provided by operating activities (includes pension
contributions) minus capital expenditures and dividends. See Appendix for
reconciliation of Free Cash Flow to the most directly comparable GAAP equivalent.
87 |
 SALES
88
’91 to ’01 Cycle CAGR: 4%
’02 to ‘09 Cycle CAGR: 4%
Net Sales
($ Mils.)
Outlook
2012 Sales Estimate:
+5 to 8% Y-O-Y
-
improved demand
2014 Sales Target:
3-Year CAGR of
+7 to 12%
-
global GDP recovery/
-
includes inorganic
2012 Sales
Estimate
2014 Sales
Target
growth
growth in 2013-2014
of 3.5% to 4%
across broad end-
markets, partially
offset by exited light-
vehicle business in
Mobile
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Note:
2003 includes Torrington
acquisition as acquired February 2003. Historical results exclude the discontinued operations of Latrobe
Steel (2006 divestment) and the Needle Roller Bearings (NRB) business (2009
divestment). NRB discontinued operations for 2003 and 2004 are based on internal estimates. |
 EARNINGS
PER
SHARE
Earnings Per
Share
Net Sales
($ Mils.)
2014 EPS
Target
2012 EPS
Estimate
89
Outlook
2012
EPS
Estimate:
$4.90
to
$5.20
per
diluted
share
2014
EPS
Target:
$6.50
to
$7.00
per
diluted
share
-
redeployment
of
capital
including
inorganic
growth
-
reflecting improved
operating
performance
Note:
Earnings are
reported
on
a
GAAP
basis
and
include
the
impact
of
special
items,
such
as
restructuring
and
reorganization
expenses,
CDSOA payments
and
goodwill
amortizatiion.
EPS
assumes
dilution.
2003
includes
Torrington
acquisition
as
acquired February 2003.
Historical results exclude the discontinued operations of Latrobe Steel (2006
diivestment) and the Needle Roller Bearings (NRB) business (2009
disvestment). NRB discontinued operations for 2003 and 2004 are based on internal estimates. |
 FREE
CASH
FLOW
Free Cash Flow
($ Mils.)
90
’91-’01 Cycle Avg: $16M
’02-’09 Cycle Avg: $87M
Outlook
2012 FCF Estimate:
$80M
after,
-
CapEx of $345M
-
dividends of $90M
-
discretionary
2014 FCF Target:
$250 to $300M
-
CapEx above
2012 FCF
Estimate
2014 FCF
Target
targeted range,
increased dividends
and lower pension /
VEBA contributions
pension / VEBA trust
contributions of
$150M (net of tax)
-$100
$0
$100
$200
$300
$400
$500
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Note:
Free cash flow
defined as net cash provided by operating activities (includes pension contributions) minus capital
expenditures and dividends. Results include discontinued operations until
divested. See Appendix for reconciliation of Free Cash Flow to the most directly
comparable GAAP equivalent. |
 CAPITAL
SPENDING
Outlook
2012 CapEx Estimate:
$345M
-
driven by global
-
targeted +20% IRR
-
~$80M maintenance
2013-2014 CapEx
above long term
target
2012
Estimate
91
Long-term Target: 4% of Sales
Capital Spending
($ Mils.)
Cap Ex
% of Sales
0%
1%
2%
3%
4%
5%
6%
7%
$0
$50
$100
$150
$200
$250
$300
$350
$400
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
spending
hurdle rate
energy, mining,
infrastructure and
heavy industries
growth
Estimated 2012 capital spending as a percent of sales is based on mid-point of company
sales estimate.
Note: |
 PENSION
Note:
Discount rate noted is for Timken’s domestic pension fund which represents the majority
of the company’s global pension assets. PBO funded percent denotes the
Company’s pension benefit obligation (PBO) funded status. Outlook
2012:
-
discretionary pension
2013 –
2014:
-
discretionary pension
-
targeting to reduce
92
contributions of
~$100M/year, net of
tax
liability through
potential lump-sum
and annuitization
programs
contributions of
~$100M, net of tax
PBO
Funded %
Discount
Rate
86%
84%
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
0%
20%
40%
60%
80%
100%
2000
2002
2004
2006
2008
2010 |
 NET
DEBT
Net Debt
/Capital
Net Debt
($ Mils.)
Note:
93
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-$600
-$400
-$200
$0
$200
$400
$600
$800
$1,000
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Long-term
Leverage
Target:
30%
-
35%
2003 includes Torrington acquisition as
acquired February 2003. Net debt is not a GAAP measure. Management believes Net Debt is an
important measure of Company's financial position, due to the amount of cash and cash
equivalents. Net Debt / Capital (leverage) defined as Net Debt / (Net Debt +
Equity). See Appendix for reconciliation of Net Debt to the most directly comparable GAAP equivalent.
|
 LIQUIDITY
AND
DEBT
MATURITY
($ Mils.)
Dec. 31, 2011
Cash
468
$
U.S. Senior Credit Facility
483
U.S. Accounts Receivable Securitization
150
Foreign Facilities
212
Sub-total credit availability
845
$
Total (including cash)
1,313
$
Dec. 31
Less than
2015 &
2011
1 Year
2013
2014
After
Short-Term Debt + CPLTD
$36
$36
$500M Senior Credit Facility (May '16)
0
$150M AR Securitization (Nov. '12)
0
Other Long-Term Debt
479
1
273
205
Total Debt
$515
$36
$1
$273
$205
Payments Due by Period
94 |
 RETURN
ON
INVESTED
CAPITAL
Note:
The company uses NOPAT/Average Invested Capital as a type of ratio that indicates return on
capital (ROIC). See Appendix for reconciliation of ROIC to the most directly
comparable GAAP equivalent. 95
Cost of
Capital
Return on Invested
Capital
’91–’01 Cycle Avg. : 6.2%
’02–’09 Cycle Avg. : 7.8%
Cost of Capital ~ 9%
2014 Target
17-19%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013 |
 2011 CAPITAL ALLOCATION
HIGHLIGHTS
•
Returning cash to
shareholders
•
358
consecutive
quarterly dividend paid
in December 2011
•
Discretionary
contributions as
capital structure and
cash flow permit
•
Industrial &
aftermarket focus
•
International
•
Accretive to
earnings in year 1
•
Earn cost of capital
in 3 years
•
Target spend in industrial
sectors: oil & gas,
infrastructure, heavy
industries and aerospace
•
Asia growth
•
Philadelphia Gear $200M
•
Drives $92M
•
Discretionary contributions
of $401M, pre-tax
•
Pension funded
status of 84%
•
Dividends $76M; raised
11% to $0.20/quarter in
May 2011
•
Share repurchase
$44M
96
Over $1 Billion of Capital Deployed in 2011
Dividends/Share
Repurchase
Pension
OPEB/Funding
Capital Spend
Acquisitions
•
$205M spent on growth,
continuous improvement
and maintenance
th |
 •
Returning cash to
shareholders
•
90 years of
consecutive quarterly
dividends
•
Industrial &
aftermarket focus
•
International
•
Accretive to
earnings in year 1
•
Earn cost of capital
in 3 years
•
Discretionary
contributions as
capital structure and
cash flow permit
•
Target spend in industrial
sectors: oil & gas,
infrastructure, heavy
industries and aerospace
•
Asia growth
2012 CAPITAL
ALLOCATION
HIGHLIGHTS
•
$345M spent on growth,
continuous improvement
and maintenance
•
Dividends ~$90M; raised
15% to $0.23/quarter in
February 2012
•
New share repurchase
program increased
to 10M shares
•
Strong balance sheet to
fund future acquisitions
•
Discretionary contributions
of ~$250M, pre-tax
•
Expected pension
funded status of 90%+
97
Pension
OPEB/Funding
Dividends/Share
Repurchase
Acquisitions
Capital Spend
Strong Capital Redeployment |
 INCENTIVE
COMPENSATION
Annual
Long-Term
Objective
Short-term operational business priorities
3 year strategic business
priorities
Long-term
shareholder
value creation
6,000 Associates globally
160 General Managers &
above
265 Senior
Managers
160 General
Managers &
above
Participants
Time Horizon
1 Year
3 Years
4 Years
10 Years
Metrics
40%
Corporate EBIT/BIC
50%
EPS
50% ROIC
Share price
30%
Business Unit EBIT/BIC
15%
BU working capital % of sales
15%
Customer service or New business
sales ratio
Note:
EBIT/BIC is a pre-tax return on invested capital (ROIC) measure. BIC denotes
beginning invested capital. The incentive compensation plan depicted above is effective
January 2012. Award
Cash
Cash or Equity
98
Equity
Restricted
Non Qualified
Stock Units
Stock Options |
 THE
STRATEGY
IS
WORKING
•
Enhance existing products
and services
•
Leverage technology
to
create value
•
Capture lifetime
of opportunity
•
Structure portfolio
for
value creation
•
Fix/Exit under-performing areas
•
Refine lean operating model
•
Improve efficiency and reduce
cost structure
•
Increase agility
•
Deliver greater profitability
•
Attractive industrial markets
•
Developing geographies
•
Channels, services and
distribution
99 |
 APPENDIX TIMKEN
ANALYSTS’
DAY
Feb.
14,
2012 |
 RECONCILIATION TO
GAAP
2011
2010
2011
2010
159.5
$
99.9
$
696.8
$
405.5
$
8.6
9.5
36.8
38.2
(1.2)
(1.4)
(5.6)
(3.7)
166.9
$
108.0
$
728.0
$
440.0
$
49.6
47.5
192.5
189.7
216.5
$
155.5
$
920.5
$
629.7
$
Interest expense
Interest income
(Dollars in millions) (Unaudited)
Reconciliation of GAAP income from continuing operations before income taxes
This reconciliation is provided as additional relevant information about the company's
performance. Management believes consolidated earnings before interest and taxes (EBIT)
are representative of the company's performance and therefore useful to investors. Consolidated earnings before
interest, taxes, depreciation and amortization (EBITDA) are another important measure of financial
performance and cash generation of the business and therefore useful to investors.
Management also believes that it is appropriate to compare GAAP income from continuing operations
before income taxes to consolidated EBIT and EBITDA.
Three Months Ended
December 31,
Twelve Months Ended
December 31,
Consolidated earnings before interest and taxes (EBIT)
Depreciation and Amortization
Consolidated earnings before interest, taxes, depreciation and
amortization (EBITDA)
Income from continuing operations before income taxes
Pre-tax reconciling items:
($ Mils.)
101 |
 1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Total Debt (a)
273
321
277
280
211
303
359
469
450
514
Less: Cash
2
8
5
12
7
5
10
0
8
11
Net Debt
271
313
271
267
204
297
350
469
442
503
Equity
1,019
985
685
733
821
922
1,032
1,056
1,046
1,005
Total Debt to Capital
21.1%
24.5%
28.7%
27.6%
20.5%
24.7%
25.8%
30.8%
30.1%
33.8%
Net Debt to Capital
21.0%
24.1%
28.4%
26.7%
19.9%
24.4%
25.3%
30.8%
29.7%
33.4%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Total Debt (a)
497
461
735
779
721
598
723
624
513
514
515
Less: Cash
33
82
29
51
65
101
30
133
756
877
468
Net Debt
464
379
706
728
656
497
693
490
(243)
(363)
47
Equity
782
609
1,090
1,270
1,497
1,476
1,961
1,663
1,596
1,942
2,043
Total Debt to Capital
38.9%
43.1%
40.3%
38.0%
32.5%
28.8%
26.9%
27.3%
24.3%
20.9%
20.1%
Net Debt to Capital
37.2%
38.4%
39.3%
36.5%
30.5%
25.2%
26.1%
22.8%
-18.0%
-23.0%
2.2%
RECONCILIATION
TO
GAAP
($ Mils.)
102
(a) Total Debt is the sum of commercial paper, short-term debt, current portion of
long-term debt and long-term debt |
 RECONCILIATION TO
GAAP
($ Mils.)
103
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
GAAP
Operating
Income
(1)
(9)
42
14
132
203
247
280
225
133
106
GAAP Other Income / (Expenses)
(8)
(2)
(6)
2
(5)
(5)
7
(16)
(10)
(7)
Earnings
Before
Interest
and
Taxes
(EBIT)
(2)
(17)
41
8
135
198
242
287
209
123
99
Provision for income taxes
(6)
15
3
51
73
93
102
80
45
35
Adjusted tax rate
37.6%
37.6%
37.6%
37.6%
36.9%
38.3%
35.7%
38.2%
36.8%
35.0%
Net
Operating
Profit
After
Taxes
(NOPAT)
(3)
(10)
25
5
84
125
149
184
129
78
64
Invested
Capital:
Total Debt
266
273
321
277
280
211
303
359
469
450
514
Shareholders' Equity
1,075
1,019
985
685
733
821
922
1,032
1,056
1,046
1,005
Total
1,341
1,292
1,306
962
1,012
1,032
1,225
1,392
1,526
1,496
1,519
Average
Invested
Capital
(4)
1,317
1,299
1,134
987
1,022
1,129
1,308
1,459
1,511
1,507
ROIC:
NOPAT
/
Average
Invested
Capital
(4)
-0.8%
1.9%
0.4%
8.5%
12.2%
13.2%
14.1%
8.9%
5.2%
4.3%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
GAAP Operating Income
(1)
(18)
79
98
237
327
219
295
462
(54)
436
729
GAAP Other Income / (Expenses)
22
37
10
12
68
80
5
16
(0)
4
(1)
Earnings
Before
Interest
and
Taxes
(EBIT)
(2)
4
115
108
249
395
299
300
478
(54)
440
728
Provision for income taxes
2
46
43
80
129
91
61
171
(16)
148
251
Adjusted tax rate
39.8%
39.8%
40.0%
32.1%
32.6%
30.6%
20.4%
35.7%
29.9%
33.5%
34.5%
Net
Operating
Profit
After
Taxes
(NOPAT)
(3)
3
69
65
169
266
208
239
307
(38)
292
477
Invested Capital:
Total Debt
497
461
735
779
721
598
723
624
513
514
515
Shareholders' Equity
782
609
1,090
1,270
1,497
1,476
1,961
1,623
1,596
1,942
2,043
Total
1,279
1,070
1,824
2,049
2,218
2,074
2,684
2,246
2,108
2,456
2,558
Average
Invested
Capital
(4)
1,399
1,175
1,447
1,937
2,134
2,146
2,379
2,465
2,177
2,282
2,507
ROIC:
NOPAT
/
Average
Invested
Capital
(4)
0.2%
5.9%
4.5%
8.7%
12.5%
9.7%
10.0%
12.5%
-1.7%
12.8%
19.0%
(1)
GAAP Operating Income excludes discontinued operations for Latrobe Steel (divested
Dec. 8, 2006) for years 2004 through 2006 and the Needle Roller Bearings business
for years 2007 through 2009 (divested Dec. 31, 2009).
(2)
EBIT is defined as operating income plus other income (expense) -
net.
(3)
NOPAT is defined as EBIT less an estimated provision for income
taxes. This tax provision excludes the tax effect of pre-tax special
items on the company's effective tax rate, as well as the the impact of
discrete tax items recorded during the year. (4)
The company uses NOPAT/Average Invested Capital as a type of ratio that indicates
return on capital (ROIC). Average Invested Capital is the sum of Total Debt and Share-
holders' Equity taken at the beginning and ending of each year and then
averaged. Total Debt is the sum of commercial paper, ST-debt, curr. portion of LT-debt & LT-debt. |
 RECONCILIATION TO
GAAP
104
(1)
Free cash flow is defined as net cash provided by operating activities (including pension
contributions) minus capital expenditures and dividends. Results include discontinued
operations until divested. Management believes that free cash flow is useful to investors because it
is a meaningful indicator of cash generated from operating activities that is available for
the execution of its business strategy. US$ Million
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
GAAP Net Cash Provided by Operating Activities
140
116
154
147
224
186
312
292
277
157
GAAP Capital expenditures
(140)
(136)
(89)
(114)
(129)
(151)
(233)
(238)
(165)
(159)
GAAP Cash dividends paid to shareholders
(23)
(22)
(25)
(26)
(28)
(30)
(39)
(45)
(45)
(44)
Free Cash Flow
(1)
(23)
(43)
39
6
67
5
40
9
68
(46)
Estimate
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Net Cash Provided by Operating Activities
178
206
204
121
319
337
337
569
588
313
212
515
Capital expenditures
(91)
(85)
(119)
(155)
(221)
(296)
(314)
(272)
(114)
(116)
(205)
(345)
Cash dividends paid to shareholders
(40)
(32)
(42)
(47)
(55)
(58)
(63)
(67)
(43)
(51)
(76)
(90)
Free Cash Flow
(1)
47
89
43
(81)
43
(17)
(40)
230
430
146
(69)
80 |
 105
RECONCILIATION
TO
GAAP -
STEEL
Steel
Segment
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Earnings
Before
Interest
and
Taxes
(EBIT)
(1)
36
(51)
44
170
220
198
281
(63)
146
271
Provision for income taxes
14
(21)
14
55
67
40
57
(23)
44
91
Net
Operating
Profit
After
Taxes
(NOPAT)
(2)
22
(31)
30
115
152
158
224
(41)
102
180
Average Beginning Invested Capital
492
432
422
447
411
425
566
550
601
754
ROIC:
NOPAT
/
Average
Beginning
Invested
Capital
(3)
4%
-7%
7%
26%
37%
37%
40%
-7%
17%
24%
(1)
EBIT
is
defined
as
operating
income
plus
other
income
(expense)
-
net.
(2)
NOPAT
is
defined
as
EBIT
less
an
estimated
provision
for
income
taxes.
(3)
NOPAT/Average
Begining
Invested
Capital
is
a
type
of
ratio
that
indicates
return
on
capital
(ROIC).
Invested
Capital
is
a
five
quarter
average
of
current
assets, ppe, net of current non interest bearing liabilities, and short term
pension obligations. |
 TIMKEN
ANALYSTS’
DAY
Feb. 14, 2012
CORPORATE BIOS |
 James W.
Griffith President and Chief Executive Officer
James W. Griffith is president and chief executive officer of The Timken Company and a member
of the
company’s board of directors.
Since being named president in 1999, Griffith has led a transformation of The Timken Company
focused on creating ever-increasing levels of value for customers and shareholders.
By harnessing its legendary quality and industry-leading innovation, Timken has pushed beyond its
historic leadership in the tapered roller bearing market into a vast global market for
technologies to manage the friction generated by moving parts and improve the
transmission of power in a wide array of machines.
Griffith joined The Timken Company in 1984 and has held positions as plant manager, vice
president of manufacturing in North America and managing director of the company’s
business in Australia. From 1996 to 1999, he led Timken’s automotive business in North America and the
company’s bearing business activities in Asia and Latin America. He was elected
president, chief operating officer and director in 1999 and was named chief executive
officer in 2002.
Griffith is president of the World Bearing Association and chairman of the board of the
Manufacturing Advocacy and Growth Network (MAGNET). He is vice president of the
Management Executives’ Society and serves on the boards of directors of the US-China Business Council
and Goodrich Corporation (NYSE: GR). In September 2011, he began a two-year term as
a member of the management board of the Stanford Graduate School of Business. He also
serves on the board of the University of Mount Union.
Griffith holds a bachelor’s degree in industrial engineering and a Master of Business
Administration from Stanford University. |
 Glenn A.
Eisenberg Executive Vice President –
Finance and Administration
Glenn A. Eisenberg is executive vice president – finance and administration and chief
financial officer of The Timken Company. He also is an officer of the
company. Eisenberg is responsible for the executive leadership of the company’s financial
organization, including accounting, tax, treasury, audit, risk management, financial
analysis and investor relations. He also has responsibility for strategic planning, corporate development,
communications, information technology and shared services.
He is a member of the company’s executive council.
Since joining Timken in 2001, Eisenberg has been instrumental in executing Timken’s
global growth and financial strategies, including the billion-dollar acquisition of
The Torrington Company. Prior to joining the company, Eisenberg served as president and chief operating officer of
United Dominion Industries, a diversified industrial manufacturing company with $2.5
billion in sales, prior to its acquisition by SPX Corporation. At UDI, he also held the positions of
president – test instrument segment, executive vice president and chief financial officer
and vice president – planning and development. Before joining UDI in 1990, he was
a vice president at the Citizens and Southern Corporation. Eisenberg serves on the boards of directors for Family Dollar Stores Inc. (NYSE: FDO) and
Alpha Natural Resources Inc. (NYSE: ANR). In addition, he serves on the boards of
Aultman Hospital and the Manufacturers Alliance/MAPI. He holds a bachelor’s degree in economics and environmental studies from Tulane
University and a master’s degree in business administration from Georgia State
University. |
 Salvatore J.
Miraglia, Jr. President –
Steel Group
Salvatore J. Miraglia, Jr. is president – Steel Group at The Timken Company and an
officer of
the company.
Since his appointment in August 2005, the Steel Group has surpassed previous records for
production, shipments and profitability. The Group has increased capacity and
expanded its line of alloy bar products while continuing to increase sales for alloy tubing and precision steel
components. Miraglia has a unique mix of experience in research and development, steelmaking
and purchasing, as well as knowledge of the bearing and mechanical power transmission
markets.
Prior to being named to his current position, Miraglia served as senior vice president of
technology, group vice president of industrial and super precision bearings in North
America and director of manufacturing in Europe, Africa and West Asia. He also has held the positions of vice
president and director of steel manufacturing, and a variety of roles in research and
purchasing. Miraglia joined the company in 1972.
A member of the American Society of Professional Engineers, the American Institute of
Metallurgical Engineers and the American Society for Metals, Miraglia also serves on
the president’s council of the Manufacturers Alliance/MAPI. He is a member of the Ohio Aerospace Institute
Board of Trustees and was appointed as President/Chairman of the Ohio Steel Council.
Miraglia holds a bachelor’s degree in metallurgy and material science from Lehigh
University and a master’s degree in metallurgy and material science from Case
Western Reserve University. He also has completed the Advanced Management Program at Harvard University. |
 Christopher A.
Coughlin President –
Process Industries
®
Christopher A. Coughlin is president of Process Industries and Supply Chain within the
Bearings
and Power Transmission Group at The Timken Company.
The Process Industries segment provides bearings and related products and services for heavy
industry, power transmission and energy market sectors. Named to the position in 2009,
Coughlin also is responsible for distribution and global supply chain management for the Bearings and
Power Transmission Group. In 2010, he assumed direction for the company's global purchasing
organization and cross-business responsibility for the European organization.
Coughlin served for five years as senior vice president – Supply Chain and Project
O.N.E. Coughlin was responsible for global supply chain management, including
strategy, demand planning, inventory management, order fulfillment and purchasing for the Bearings and Power
Transmission Group. He also led Project O.N.E., a multiyear initiative to streamline business
processes and implement an enterprise resource planning system. Coughlin first took
over leadership of Project O.N.E. in 2004.
Previously, Coughlin was based in Colmar, France where he held a variety of management
positions including vice president - industrial equipment, vice president –
process industries and vice president – primary metals. He also has served as business development manager for
Timken’s customized Milltec program, which provides mill operation and
maintenance services in India. Coughlin began his Timken career in 1984 in the
company’s steel operations.
Coughlin serves on the board of directors of the Akron Canton Foodbank.
He received a bachelor’s degree in metallurgical engineering from the University of
Cincinnati and a master’s degree in business administration from Case Western
Reserve University. |
 Richard G.
Kyle President –
Mobile Industries and Aerospace
Richard G. Kyle is president of Mobile Industries and Aerospace segments of The Timken
Company.
In 2010, Kyle expanded his role to include responsibility for the company's high-growth
aerospace segment. That segment includes Timken's global commercial and military
aviation and aerospace businesses as well as the health and positioning control
business. The segment is focused on growing its portfolio of high-technology products and services to provide greater value
to its diverse base of global customers and markets.
Previously, Kyle was the president of the Mobile Industries segment. He led the business
through significant changes in product portfolio, market mix and operating capabilities
that yielded dramatic improvements in the financial performance of the segment. The Mobile Industries business
is now focused on growing globally by serving the mining, heavy-truck, construction,
agriculture, rail and light-vehicle equipment markets with a broad offering of
high-performance power transmission products and related services.
Kyle previously served as vice president – manufacturing for the Mobile Industries
segment. He was a key leader in the transformation of the segment while also being
responsible for managing the Bearings and Power Transmission Group’s global manufacturing operations. He was
charged with driving operational excellence through lean manufacturing while supporting the
company’s strategic growth initiatives. Kyle joined Timken in 2006 as vice president of manufacturing for the company’s former
Industrial Group. Kyle previously served as vice president of operations for a division
of Hubbell, Inc. Before joining Hubbell, he served in a variety of management positions with Cooper Industries.
Kyle serves on the board of directors of the United Way of Greater Stark County.
He received a bachelor’s degree in mechanical engineering from Purdue University and a
master’s degree in management from Northwestern University’s J.L. Kellogg
Graduate School of Management. |
 Philip D.
Fracassa Senior
Vice
President
and
Controller
-
Bearings
and
Power
Transmission
Philip D. Fracassa is senior vice president and group controller for the Bearings and Power Transmission
(B&PT) Group at The Timken Company.
Named to this newly created position in 2010, Fracassa leads the finance activities supporting
the global B&PT business, which includes Timken’s Mobile Industries,
Process Industries and Aerospace & Defense reporting segments. He focuses on
integrating the efforts of the group's controllers and leveraging the capabilities of Project O.N.E. to support Timken’s growth in key
markets around the world.
Fracassa previously served as senior vice president – tax and treasury. Named to that
role in 2006, he led the company’s global treasury and tax activities, including
liquidity management, pension funding, corporate insurance, and tax compliance, planning and strategy.
Fracassa joined the company as vice president – tax in 2005. Prior to joining Timken, he
was senior tax counsel and director of taxes for Visteon Corporation. He began his
career with Price Waterhouse LLP in Detroit and also served as a tax attorney with General Motors
Corporation.
Fracassa is a member of Financial Executives International, the Tax Executives Institute and
the Manufacturers Alliance/MAPI. He was included in Treasury & Risk
magazine's lists of 40 distinguished finance executives under age 40 (2007) and top 100 most influential persons in
finance (2009).
He is active in community affairs in Northeast Ohio and currently serves on the boards of the
Canton Regional Chamber of Commerce and the Cuyahoga Valley Scenic Railroad.
Fracassa holds a bachelor's degree in accounting and a juris doctor degree in law from the
University of Detroit. In 2011, he completed the Advanced Management Programme at
INSEAD. He is a certified public accountant and licensed attorney in the state of Michigan. |
 Christopher J.
Holding Senior Vice President –
Tax and Treasury
Christopher J. Holding is senior vice president of tax and treasury for The Timken Company.
Named to this position in 2010, he leads the company’s global tax and treasury
activities, including
cash and liquidity management, pension funding, corporate insurance, and tax compliance,
planning and strategy.
Holding previously served three years as controller of the company's Process Industries
segment within the Bearings and Power Transmission Group. He joined Timken in 2004 as
operations controller for the company's former Industrial Group.
Prior to joining Timken, Holding served in various financial management positions with Arthur
Andersen & Company, Bishopric Inc., Ashley Ward Inc. and Union Metal Corp.
Holding is a member of the American Institute of Certified Public Accountants and is on the
Treasury Council of the Manufacturers Alliance/MAPI. He is also a member of Financial
Executives International. Holding serves as president of the board of Jackson Local Schools
Foundation and as secretary/treasurer of the board of Project REBUILD, which is a nonprofit
agency that re-engages at-risk youth to complete their high school education.
He holds a bachelor's degree in accounting and a master's degree in taxation, both from the
University of Cincinnati. |
 J. Ted
Mihaila Senior
Vice
President
–
Controller
J. Ted Mihaila is senior vice president – controller and an officer of The Timken
Company.
Mihaila directs the company’s finance and corporate shared services teams. His oversight
of the two teams enables leverage of the services the company provides on an enterprise
basis. Mihaila has responsibility for the compilation, analysis and reporting of accurate and timely
actual and forecasted financial results. Under his guidance, the finance team provides
information that enables company leaders to make strategic decisions about growth
opportunities, investments and markets.
Mihaila previously served as vice president – business development and controller in the
Industrial Group. He directed the development of long-term strategies and
implementation of tactical plans to accelerate the growth of the company’s former Industrial Group through
acquisitions and affiliations.
Mihaila has managed finances for various production facilities and business groups during his
career at Timken. He was promoted to an accounting role in 1977 after joining the
company in 1975. He was named to his current position in 2006.
Mihaila is an active member of the Manufacturers Alliance/MAPI. Financial Council. He
also serves on the board of Habitat for Humanity of Greater Stark County and the George
W. Daverio School of Accountancy Advisory Board at The University of Akron.
Mihaila received a bachelor’s degree in accounting from The University of Akron and a
master’s degree in business administration from Kent State University.
|
 Kari Groh
Vice President –
Communications and Public Relations
Kari Groh is vice president – communications and public relations for The Timken Company.
Named to the position in 2009, she is responsible for worldwide communications, directing the development
of Timken messaging with customers, media, associates and shareholders. She oversees reputation management, brand strategy,
marketing communications, corporate events, creative services and design, the corporate
website and the company’s global intranet, including a daily newspaper available in
seven languages. She also has responsibility for directing Timken’s global citizenship strategy and programs.
Groh began her career at Timken while pursuing a degree in journalism. In 1981, she was named
assistant editor of the TIMKEN magazine. Thereafter, she held a number of positions in
communications including supervisor. In 1992, she was named manager – public relations and
marketing communications. Groh was promoted to general manager in the company’s bearing
business in 1998 and then advanced through a series of operating roles, ultimately
assuming responsibility for global customer service, warehouse management and logistics for the
distribution business.
She was instrumental in implementing a number of warehousing and logistics improvements and
steered the integration of customer service following the company’s largest
acquisition in 2003. Groh also played a role in the company’s “Project O.N.E.” enterprise system and process
implementation. Prior to being named to her current position, she was general manager of
organizational effectiveness as part of the company’s Information Technology
leadership team.
She is a member of Team NEO marketing Council, the Arthur W. Page Society, Northeast Ohio
Senior Communicators Forum, the Ohio Steel Council’s Communications Committee and
OESA’s Communications Council. She serves as a board member of Stark State College in Canton,
Ohio, and Pathway Caring for Children.
In addition to a bachelor's degree from The University of Akron, Groh holds an MBA degree from
Ashland University. |
 Steve D.
Tschiegg Director –
Capital Markets and Investor Relations
Steve D. Tschiegg is director – capital markets and investor relations at The Timken
Company.
Tschiegg has responsibility for communicating the company's financial results, performance and
strategies to the financial community, as well as leading company efforts in capital structure
planning, new financings and refinancings, bank relationships and rating agency
relations in addition to oversight of the company’s risk management function.
Prior to being named to his current position in 2008, Tschiegg was manager of investor
relations. He also has held positions including senior financial analyst, principal
– corporate finance and manager – global risk management in the company's finance group.
Tschiegg joined Timken in 1997. He previously held several positions in the finance area at
Ford Motor Company, including financial analysis – Engine Operations, new product
business planning – Transmission & Chassis Operations and the most recent being
supervisor – operations analysis at one of Ford’s engine manufacturing facilities.
Tschiegg received a bachelor’s degree in business administration and mathematics from
Heidelberg College and a master's degree in business administration from Case Western
Reserve University. He completed the Executive Development for Global Excellence
program at the Darden School of Business at the University of Virginia.
|
 Jack
Gecovich Capital Markets and Investor Relations Specialist
Jack Gecovich is capital markets and investor relations specialist within the Treasury
Corporate
Center for the Timken Company.
Gecovich is responsible for analytical work across a broad range of areas to expand the
company's overall investor relations program, which communicates the company's
financial performance, strategy and special developments to prospective and existing investors and the
broader financial community. He also supports various corporate finance special projects
within the treasury function. Gecovich joined Timken in 2010. Gecovich previously served as co-portfolio investment manager for LanderNorth Asset Management in Beachwood, Ohio.
Prior to that, he was with KeyCorp in Cleveland as a lead financial analyst.
Gecovich holds a bachelor's degree in business administration from Yeshiva University in New
York and a master's degree in business administration finance from Cleveland State
University. |
 Lorrie Paul
Crum Manager –
Global Media and Strategic Communications
Lorrie Paul Crum is manager – global media and strategic communications at The Timken
Company. Named to the position in December 2008, Crum is responsible for leading Timken’s global
reputation
and media relations efforts, while also contributing expertise in financial communications. As
part of the company's communications leadership team, she provides executive support to
guide effective corporate and marketing communications among the company's internal and
external stakeholders. Before joining Timken in 2007 as a consultant on corporate reputation and communication, Crum
served as vice president of corporate communications at Parker Hannifin. In the 1990s,
she was chief of communications at Rubbermaid, Inc. through the company's merger with
Newell Co. She also managed financial communications and public relations at Tampa
Electric/TECO Energy. Crum is a member of the National Investor Relations Institute and the Northeast Ohio Marketing
Leadership Roundtable. She also is accredited by the Public Relations Society of
America (PRSA) and served as a PRSA chapter president.
Crum received a bachelor's degree in organizational communication and Spanish from The Ohio
State University and a master's in business and public administration from Golden Gate
University. |