The Timken Company (NYSE:TKR) Q4 2022 Earnings Call Transcript

Richard Kyle: Well, I would say we have significantly greater visibility than what we normally would. I think the supply chain issues have reduced significantly. They are still there. Everybody had problems operating in China in the fourth quarter as an example. And there is other issues out there. So, our backlog organically if you adjust for the acquisitions and divestures, is up modestly from where it was a year ago. And our run rate of shipping is up again high single digits from where it was a year ago. But, our backlog also peaks around the middle of last year. So, we have been liquidating backlog modestly. So, I would say we have very good visibility out for the next 3 to 4 months. And the demand picture looks quite good.

In our geographic walk, we show that Europe was down modestly as Phil mentioned. If you adjust for Russia, it was up a little bit. But that would include price. So, if you — Europe from a volume in the fourth quarter was down. So, that would be really the only geographic area that’s soft. And to come back and answer your last question, we want to feel really good about the position we are in. I think we are going to get off to a really good start. The midpoint of our guide is based again on I think a pretty cautious softening in the second-half. And even that’s a good result. And we are in an excellent position. But, we are being too cautious on it, we will capitalize on that. And predicting these industrial markets and inflections is not an easy task.

So, focus on where we have the visibility. And then, really focus on growing the earnings power and the revenue of the company through the cycle. And I feel great about that. So, I think we are in a really good position.

Philip Fracassa: One other point, Joe, when you look at the backlog all-in, I mean we are actually higher. We ended the year higher than the end of 2021. So, we are sitting here with a stronger backlog than we had a year ago. And I think that bodes well at least for the near-term visibility.

Joe Ritchie: Great. Thanks, guys.

Richard Kyle: Thanks, Joe.

Operator: Thank you, Joe. Our next question comes from Chris Dankert from Loop Capital. Chris, your line is now open.

Chris Dankert: Hey, good morning, guys. Thanks for taking the questions. I guess first off, Phil you had mentioned when we were talking about the margins in ’23 flattish now. I think on the last call, we were kind of hoping to be able to nudge that a bit higher in ’23. The moving parts there I mean you called out higher labor and material et cetera. But really are there any investment cost keep in mind in that margin guide they are stepping up in the New Year because I assume for the most part, the labor rates and FX was if anything kind of improved versus fourth quarter, no?