• Revenue: $1.14 billion, down 4.2% from last year.
• Organic Revenue Decline: 3.1% decrease from last year.
• Adjusted EBITDA Margin: 18.2%.
• Adjusted Earnings Per Share (EPS): $1.40, down from $1.77 last year.
• Net Income: $78 million or $1.11 per diluted share on a GAAP basis.
• Free Cash Flow: $23 million, higher than last year.
• Engineered Bearings Sales: $761 million, down 5.2% from last year.
• Industrial Motion Sales: $380 million, down around 2% from last year.
• Adjusted EBITDA for Engineered Bearings: $159 million or 20.9% of sales.
• Adjusted EBITDA for Industrial Motion: $67 million or 17.7% of sales.
• Interest Expense: $5 million lower than last year.
• Adjusted Tax Rate: 27%.
• Net Debt to Adjusted EBITDA: 2.2 times.
• Tariff Impact: Estimated net direct impact of $25 million for the year.
• Cost Savings Target: $75 million for 2025.
• Free Cash Flow Outlook: Around $375 million at the midpoint for 2025.

• Warning! GuruFocus has detected 5 Warning Sign with TKR.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The Timken Co (NYSE:TKR) delivered solid first-quarter results with sales over $1.1 billion, despite challenging operating conditions.
• The company saw growth in Asia, driven by increased demand in the wind energy sector.
• The CGI acquisition continues to perform well, contributing positively to the company's margins.
• The company generated higher free cash flow compared to the prior year, maintaining a solid balance sheet.
• The Timken Co (NYSE:TKR) is actively passing tariff costs into the market through repricing, aiming to fully offset the cost impact by the end of the year.

Negative Points

• Organic revenue was down around 3% from last year, with lower demand in Europe and the Americas.
• Adjusted EBITDA margins and adjusted earnings per share were below the prior year, primarily due to lower volumes and higher manufacturing costs.
• The company is facing a net direct impact from tariffs, estimated at around $25 million for the year.
• Industrial market conditions are expected to remain challenging for the rest of the year.
• The company experienced unfavorable currency impacts, contributing to a decrease in adjusted EBITDA.

Q & A Highlights

Q: Can you elaborate on the assumptions behind the guidance update, particularly regarding volume and price expectations? Are there differences by segment? A: Philip Fracassa, CFO, explained that the guidance assumes a slight improvement in pricing due to tariffs, approaching 1.5%, and a corresponding decline in volume. The volume change is expected to impact Industrial Motion more than Bearings, with Industrial Motion being more indexed to Europe. Services, initially expected to grow mid-single digits, is now expected to be neutral for the year.

Q: How are renewable energy trends, especially in China, shaping up for the year? A: Philip Fracassa noted a positive surprise in renewable energy demand in Q1, driven by improved order intake rates. Initially expecting flat growth, the company now anticipates mid-single-digit growth in renewables for the year, with long-term potential in the aftermarket.

Q: Did customers pull forward demand to get ahead of tariffs? A: Philip Fracassa stated there was no material evidence of customers pulling forward demand due to tariffs. Most products are produced in the US, and the April revenue and May backlog are in line with expectations, indicating stable demand.

Q: What actions are planned for the auto OE business, and will it include trucks? A: Richard Kyle, CEO, mentioned the focus is on light vehicles and OEM, not affecting the aftermarket. The strategy is similar to past exits from the light vehicle industry, targeting more than half of the auto OE business. This is expected to improve corporate margins by 2026 and 2027.

Q: How is Timken positioned relative to competitors regarding tariff impacts and pricing strategies? A: Richard Kyle indicated that competitors are also raising prices, with Timken's US footprint potentially offering an advantage. The company aims to pass cost increases through pricing and maintain market share, with a focus on long-term opportunities to capture share and reposition the footprint.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.