Timken’s first quarter results were met with a modestly negative market response, as the company’s revenue edged above Wall Street expectations while non-GAAP profit fell slightly short. Management pointed to continued softness in European and North American industrial markets as key factors behind weaker volumes, with CEO Richard Kyle noting that “lower demand in Europe and the Americas” weighed on organic sales. The company also cited unfavorable product mix and increased manufacturing costs as contributors to margin pressures, partially offset by targeted cost actions and steady performance from the CGI acquisition.
Is now the time to buy TKR? Find out in our full research report (it’s free).
Timken (TKR) Q1 CY2025 Highlights:
- Revenue: $1.14 billion vs analyst estimates of $1.13 billion (4.2% year-on-year decline, 1.1% beat)
- Adjusted EPS: $1.40 vs analyst expectations of $1.42 (1.5% miss)
- Adjusted EBITDA: $208.1 million vs analyst estimates of $211.7 million (18.2% margin, 1.7% miss)
- Management lowered its full-year Adjusted EPS guidance to $5.35 at the midpoint, a 3.6% decrease
- Operating Margin: 12.6%, down from 15.5% in the same quarter last year
- Organic Revenue fell 3.1% year on year (-9.2% in the same quarter last year)
- Market Capitalization: $5.15 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Timken’s Q1 Earnings Call
- Bryan Blair (Oppenheimer) asked about the volume and pricing assumptions underlying the flat organic sales guidance. CFO Philip Fracassa explained that pricing—mainly for tariffs—offset volume declines, with Industrial Motion bearing the brunt of the reduction.
- Bryan Blair (Oppenheimer) pressed for more detail on renewable energy trends in China. Fracassa said the company was “pleasantly surprised” by Q1 momentum and now expects mid-single-digit growth in renewables, helped by improved order intake.
- Stefan Diaz (Morgan Stanley) inquired about customer demand pull-forward ahead of tariffs. Fracassa responded there was “nothing notable” indicating buy-ahead behavior, supported by stable April revenues and backlog.
- Stefan Diaz (Morgan Stanley) asked for details on the auto OEM review and whether it mirrored past exits from light vehicles. CEO Richard Kyle clarified the focus is on light vehicle OEM, aiming for a smaller market presence and higher margins by 2027.
- Kyle Menges (Citi Group) questioned how Timken’s pricing actions compare to peers and how the U.S. manufacturing footprint affects tariff impacts. Kyle said the company’s footprint is “at worst, neutral and at best advantaged” compared to competitors, and most mitigation will come from pricing.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) how effectively Timken executes its tariff mitigation strategy through price increases and cost actions, (2) the progress and early financial impact of the automotive OEM business review, and (3) whether stabilization in industrial demand and growth in renewables can offset persistent softness in core markets. Updates on margin trends and the closure of underperforming facilities will also be key signposts.
Timken currently trades at $73.62, up from $65.28 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).
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