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Industrial component provider Timken (NYSE:TKR) reported Q1 CY2025 results exceeding the market’s revenue expectations , but sales fell by 4.2% year on year to $1.14 billion. Its non-GAAP profit of $1.40 per share was 1.7% below analysts’ consensus estimates.
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Timken (TKR) Q1 CY2025 Highlights:
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Revenue: $1.14 billion vs analyst estimates of $1.13 billion (4.2% year-on-year decline, 1.1% beat)
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Adjusted EPS: $1.40 vs analyst expectations of $1.42 (1.7% miss)
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Adjusted EBITDA: $208.1 million vs analyst estimates of $211.7 million (18.2% margin, 1.7% miss)
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Management lowered its full-year Adjusted EPS guidance to $5.35 at the midpoint, a 3.6% decrease
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Operating Margin: 12.6%, down from 15.5% in the same quarter last year
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Free Cash Flow Margin: 2.1%, up from 0.4% in the same quarter last year
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Organic Revenue fell 3.1% year on year (-9.2% in the same quarter last year)
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Market Capitalization: $5.13 billion
StockStory’s Take
Timken’s first quarter results reflected ongoing demand softness in several core markets, with leadership noting particular pressure in Europe and the Americas. CEO Richard Kyle cited successful execution on targeted cost controls and highlighted continued growth in Asia, especially in wind energy, as partial offsets to lower volumes and unfavorable product mix. He acknowledged that “adjusted EBITDA margins came in below prior year, driven primarily by lower volumes, higher manufacturing costs and unfavorable mix.”
Looking ahead, management lowered full-year adjusted earnings guidance, primarily due to the impact of newly implemented tariffs and persistent industrial market headwinds. Kyle and CFO Phil Fracassa emphasized active pricing actions to pass through tariff costs, but acknowledged that the full benefit will not be realized until late in the year. Kyle described the company’s approach as “quickly responding and actively passing the cost into the market,” while also reaffirming the goal of $75 million in cost savings for 2025. The team characterized the external environment as fluid and uncertain, particularly around evolving trade policy.
Key Insights from Management’s Remarks
First quarter performance was shaped by lagging demand in key geographies, cost inflation, and early-stage tariff impacts, with management focusing on offsetting these challenges through pricing and operational discipline.
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Geographic Demand Shifts: Timken experienced lower demand in Europe and the Americas, while Asia—especially China—benefited from improved renewable energy activity, with wind sector demand rebounding off a low base.
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Tariff Mitigation Efforts: Leadership detailed rapid repricing initiatives to offset new tariffs, aiming to fully neutralize the cost impact by year-end. Rich Kyle noted the company’s large U.S. manufacturing footprint offers some relative advantage, though there will be a net headwind of approximately $25 million in 2025 due to lagged pricing adjustments.
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Automotive OEM Portfolio Review: Management began a strategic review targeting more than half of its automotive original equipment (OE) business, concentrating on light vehicles. The goal is to improve margins by reducing exposure to lower-return segments, with anticipated benefits materializing in 2026 and 2027.
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Cost Containment and Acquisition Benefits: The CGI acquisition continued to contribute positively to segment margins. Ongoing cost reduction initiatives, including SG&A savings, helped partially offset higher manufacturing and logistics costs.
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Manufacturing Footprint Adjustments: The closure of the Fort Scott facility is progressing, with full shutdown expected in the third quarter. This move is intended to streamline operations and improve Industrial Motion segment margins as duplicative costs are eliminated.