Industrial component provider Timken (NYSE:TKR) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 2.7% year on year to $1.16 billion. Its non-GAAP profit of $1.37 per share was 10.1% above analysts’ consensus estimates.
Is now the time to buy TKR? Find out in our full research report (it’s free for active Edge members).
Timken (TKR) Q3 CY2025 Highlights:
- Revenue: $1.16 billion vs analyst estimates of $1.12 billion (2.7% year-on-year growth, 3.6% beat)
- Adjusted EPS: $1.37 vs analyst estimates of $1.24 (10.1% beat)
- Adjusted EBITDA: $201.7 million vs analyst estimates of $190.2 million (17.4% margin, 6% beat)
- Management reiterated its full-year Adjusted EPS guidance of $5.25 at the midpoint
- Operating Margin: 12%, in line with the same quarter last year
- Organic Revenue was flat year on year vs analyst estimates of 2.1% declines (265.3 basis point beat)
- Market Capitalization: $5.52 billion
StockStory’s Take
Timken’s third quarter was marked by resilience in a mixed industrial environment, with management pointing to higher pricing, cost reductions, and disciplined portfolio management as key drivers. Engineered Bearings delivered volume and margin gains, offsetting weakness in Industrial Motion, which faced lower solar demand and cautious customer maintenance spending. CEO Lucian Boldea emphasized, “Our management team’s top priority is finishing the year strong,” while highlighting Timken’s ability to pass through higher costs and leverage its global manufacturing footprint. The market responded positively to Timken’s performance, reflecting confidence in its operational discipline and margin execution.
Looking ahead, management expects margin expansion and organic growth to be driven by a sharper focus on profitable verticals, ongoing pricing actions to offset tariffs, and targeted integration of acquired businesses. Boldea described plans for an 80/20 portfolio review to “structurally improve margins, grow faster in the most profitable verticals and create significant value for shareholders.” CFO Michael Discenza noted that the company’s mitigation tactics should help recapture the margin impact of tariffs by next year, while ongoing cost savings and pricing initiatives are set to support earnings growth in 2026.
Key Insights from Management’s Remarks
Management credited its third quarter performance to higher pricing, strong execution in Engineered Bearings, and continued cost reduction efforts, while highlighting the ongoing impact of tariffs and the need to optimize the business portfolio.
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Pricing actions offset headwinds: Management highlighted that price increases across both major segments were key to offsetting higher input costs and the $20 million tariff headwind. Pricing momentum was especially strong in the industrial distribution channel, where changes can be implemented within 60 days, while original equipment manufacturer (OEM) pricing adjustments have a longer lag.
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Engineered Bearings outperformance: The Engineered Bearings segment saw organic growth from higher pricing and volumes, particularly in renewable energy, aerospace, and general industrial markets. Margins here benefited from operational improvements and disciplined cost management, even as tariffs weighed on profitability.
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Industrial Motion softness: Lower demand in the Industrial Motion segment, especially in solar and agricultural markets, led to a decline in organic sales. However, the CGI acquisition and new product introductions helped partially offset these volume pressures. The services business also faced delays as customers postponed maintenance, impacting segment performance.
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Regional trends mixed: Growth in Asia Pacific was driven by wind energy shipments in China, while EMEA (Europe, Middle East, Africa) returned to growth for the first time in two years, supported by wins in off-highway, rail, and heavy industries. Latin America and certain North American markets remained sluggish, reflecting broader industrial caution.
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Portfolio optimization underway: Boldea announced a rigorous 80/20 portfolio review, targeting improvements in business mix and a focus on high-margin, engineer-to-order solutions. The company is aiming to exit or restructure less profitable automotive businesses and accelerate integration of acquired operations to capture synergies and expand into new regions.
Drivers of Future Performance
Timken’s outlook hinges on expanding into fast-growing verticals, mitigating tariff impacts, and executing on its margin improvement initiatives.
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Focus on profitable verticals: Management is prioritizing growth in high-margin markets such as wind energy, automation, and food and beverage, leveraging Timken’s expertise in engineered solutions. The company views global expansion of acquired businesses as a key growth lever, aiming for above-market organic revenue gains.
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Tariff mitigation and pricing: The team is actively using pricing actions and supply chain adjustments to blunt the impact of rising tariffs, which are expected to remain a near-term headwind. Discenza stated that exiting the year with higher pricing momentum would position Timken to recapture margins in 2026, with additional mitigation tactics under review if China tariffs increase further.
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Cost savings and integration: Continued cost reduction initiatives, including footprint realignment and SG&A cuts, are expected to support profitability. Management reiterated its commitment to delivering $75 million in annual savings, with the majority realized in the second half of this year and carrying over into 2026 alongside further integration of recent acquisitions.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will track (1) progress on the 80/20 portfolio review, especially any divestitures or restructurings in lower-margin automotive businesses; (2) the pace of integration and geographic expansion of acquired businesses, particularly in high-growth end markets; and (3) the effectiveness of pricing actions and cost mitigation strategies in offsetting tariff pressures. Additional focus will be on free cash flow conversion and the company’s ability to leverage a potential recovery in industrial demand.
Timken currently trades at $79.25, up from $77.21 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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