The Timken Company Q3 FY2025 earnings call

• Lucian Boldea emphasized the company's strong franchise built over 125 years, with focus on innovation, customer collaboration, and operating discipline.
• Intends to use an 80/20 mindset to improve margins, grow in profitable verticals, and create value for shareholders.
• Reviewed portfolio, operating model, products, and services, targeting growth in newer end markets like automation and food and beverage.
• CGI acquisition was accretive to margins, included for about 2 months in the quarter as it passed the 1-year ownership mark.

Engineered Bearings: Sales were $766 million in the third quarter, up 3.4% from last year. Organically, sales were up 2.7% driven by higher pricing and volumes across all geographic regions. Adjusted EBITDA was $144 million, or 18.8% of sales. Industrial Motion: Sales were $391 million, up 1.3% from last year. The CGI acquisition contributed 2.9% to the top line, while organic sales declined 3.5% due to lower demand. Adjusted EBITDA was $75 million, or 19% of sales.

• Reaffirmed full-year earnings guidance midpoint of $5.25, offsetting tariff headwinds and lower fourth-quarter outlook.
• Raised full-year net sales outlook by 50 basis points, expecting 2025 sales down ~0.75% at midpoint, with organic sales down ~1.75%.
• Full-year consolidated adjusted EBITDA margins expected in low to mid-17% range. Reaffirmed free cash flow outlook of $375 million at midpoint.

• Tariffs were a $20 million headwind in the third quarter, with higher incremental gross tariff costs. The full-year net negative impact from tariffs is estimated at ~$15 million or $0.15 per share.
• Evolving trade situation continues to weigh on industrial market activity, with customers cautious through year-end.

Q: Are you already seeing sequential weakness or incremental weakness baked into the guide?

A: Our outlook includes latest order trends, with seasonally declining order book in third quarter but year-over-year order book up; cautious given tariff situation and trade environment.

Q: What drives return to growth in EMEA and confidence in sustaining it?

A: EMEA saw growth as comps got easier, strength in off-highway, rail, and heavy industry sectors; confidence based on improving comps and new business wins.

Q: How successful have you been in passing pricing to offset tariffs?

A: Largely successful, with pricing above 1.5% for full year; expect to continue pushing pricing to recapture margin on tariff impact next year