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- **Revenue Growth**: Q3 revenue up 2.7% YoY to $1.16 billion, driven by pricing and CGI acquisition.
- **Margin Expansion**: Adjusted EBITDA margin improved 50bps to 17.4%, with near-40% incremental margins despite $20 million tariff headwinds.
- **80/20 Strategy**: Targeting 20% margin businesses, with plans to exit 4% of automotive portfolio and expand global reach of acquired businesses.
- **Tariff Mitigation**: Full-year tariff impact $15 million ($0.15 EPS), with 2026 recovery via pricing and supply chain adjustments.
- **2026 Outlook**: Cautious optimism for margin expansion and cost savings ($75M), with Q1 2026 expected to show seasonal step-up from Q4 2025.

**【CEO Summary Section】**
- **Revenue Growth and Margin Expansion**: CEO Lucian Boldea highlighted Q3 revenue of $1.16 billion, up 2.7% YoY, with adjusted EPS of $1.37 (11% YoY growth). He emphasized margin expansion as a key focus, aiming to improve profitability through a 80/20 portfolio strategy, prioritizing high-margin verticals.
- **80/20 Portfolio Strategy**: Boldea outlined plans to divest underperforming assets (e.g., automotive business) and double down on high-margin engineered solutions, leveraging Timken's global footprint and cross-selling opportunities across Engineered Bearings and Industrial Motion Solutions.
- **2026 Outlook**: Expressed cautious optimism for 2026, citing encouraging order trends in wind energy, aerospace, and rail, with a focus on tariff mitigation and pricing actions.

**【CFO Financial Commentary】**
- **Q3 Financial Highlights**: CFO Mike Discenza reported:
  - **Revenue**: $1.16 billion (2.7% YoY), driven by pricing (+1.5% YoY) and CGI acquisition (+1% YoY).
  - **Margins**: Adjusted EBITDA of $202 million (17.4% of sales), up 50bps YoY, with near-40% incremental margins despite $20 million tariff headwinds.
  - **Regional Performance**: Growth in Asia Pacific (+2% YoY, led by China wind) and EMEA (+2% YoY, off-highway and rail), offset by Americas decline (-1% YoY).
- **Tariff Mitigation**: Full-year tariff impact estimated at $15 million ($0.15 EPS), with plans to recapture margins in 2026 through pricing and supply chain adjustments.
- **Free Cash Flow**: $164 million Q3, guiding to >$100 million Q4, supporting net debt reduction to 2.1x EBITDA.

**【Q&A Highlights】**
- **Near-Term Outlook**: Q4 organic sales expected to decline 2% YoY due to seasonal weakness and trade uncertainty, but EMEA showing signs of recovery.
- **Tariff Strategy**: Pricing actions (2%+ Q3) and supply chain changes to offset tariffs, with 2026 margin recovery contingent on trade normalization.
- **80/20 Execution**: Plans to exit low-margin automotive business (4% of portfolio) and accelerate global expansion of acquired businesses, targeting 17-18% EBITDA margin by 2026.
- **2026 Incrementals**: $75 million cost savings (60% in H2 2025) and pricing momentum to drive margin expansion, with Q1 2026 expected to show seasonal step-up from Q4 2025.

The Timken Company (TKR) Q3 2025 Earnings Call Transcript

Revenue

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TKR

TKR fundamentals

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