Executive Summary

Q2 2025 sales were $1.17B, down 0.8% YoY; adjusted EPS was $1.42 and GAAP diluted EPS was $1.12, with adjusted EBITDA margin at 17.7% . Versus consensus, TKR delivered a revenue and adjusted EPS beat for the quarter (see Estimates Context).*
Guidance trimmed: the high end of FY25 GAAP EPS lowered to $4.20 (from $4.40) and adjusted EPS to $5.40 (from $5.60); revenue now expected -2.0% to -0.5% vs 2024 (from -2.5% to 0%) . Management also guided full-year adjusted EBITDA margin to the mid-17% range .
Cash generation solid: cash from operations $111M and free cash flow $78M; dividend increased 3% and ~340K shares repurchased, returning $47M to shareholders .
Tariff headwind improving: FY25 net tariff impact reduced to ~$10M (from ~$25M) with price actions offsetting most of the Q2 impact; full mitigation targeted by year-end on a run-rate basis . Backlog rose mid single digits sequentially, supporting 2026 optimism .

What Went Well and What Went Wrong

What Went Well

Revenue and adjusted EPS beat consensus; adjusted EPS $1.42 and net sales $1.173B with price/mix and CGI acquisition contributing positively .*
Solid cash generation and shareholder returns: CFO highlighted $111M operating cash, $78M FCF, and raised dividend by 3% with 340K shares repurchased ($47M returned) .
Strategic positioning and backlog: CEO emphasized backlog up mid-single digits QoQ and confidence in mitigating tariffs via pricing and cost initiatives; optimistic about industrial expansion in 2026 .

Management quotes:

“We have implemented pricing and other actions to mitigate the impact of tariffs… driving cost initiatives to deliver resilient financial performance in 2025.”
“We expect the operating environment to remain challenging in the second half… Looking further ahead, we are optimistic about 2026.”

What Went Wrong

Margin compression: adjusted EBITDA margin fell to 17.7% (from 19.5% YoY) and net income margin to 6.7% (from 8.1%) on lower volume and incremental tariff costs .
Segment pressures: Engineered Bearings adj. EBITDA margin declined to 19.7% (from 21.2%) and Industrial Motion to 18.3% (from 20.0%) due to tariffs, lower volumes, and higher SG&A .
Guidance trimmed: high end of FY25 EPS ranges lowered; management now plans FY25 revenue -2.0% to -0.5% vs 2024 (from -2.5% to 0%) reflecting cautious H2 demand and trade uncertainty .

Financial Results

Consolidated metrics vs prior year, prior quarter, and consensus

Metric	Q2 2024	Q1 2025	Q2 2025	Consensus Q2 2025
Revenue ($USD Billions)	$1.18	$1.14	$1.17	$1.156*
Diluted EPS (GAAP, $)	$1.36	$1.11	$1.12	—
Adjusted EPS ($)	$1.63	$1.40	$1.42	$1.361*
Net Income Margin (%)	8.1%	6.9%	6.7%	—
Adjusted EBITDA Margin (%)	19.5%	18.2%	17.7%	—

Notes: Consensus estimates marked with * are values retrieved from S&P Global.

Beat/miss: Revenue beat ($1.17B vs $1.156B consensus) and adjusted EPS beat ($1.42 vs $1.361)*.

Segment breakdown (Q2 2025 vs Q2 2024)

Segment	Net Sales ($mm) Q2 2024	Net Sales ($mm) Q2 2025	Adj. EBITDA ($mm) Q2 2024	Adj. EBITDA ($mm) Q2 2025	Adj. EBITDA Margin Q2 2024	Adj. EBITDA Margin Q2 2025
Engineered Bearings	$783.4	$777.4	$166.2	$153.4	21.2%	19.7%
Industrial Motion	$398.9	$396.0	$79.7	$72.6	20.0%	18.3%
Consolidated	$1,182.3	$1,173.4	$230.2	$208.2	19.5%	17.7%

KPIs

KPI	Q1 2025	Q2 2025
Cash from Operations ($mm)	$58.6	$111.3
Free Cash Flow ($mm)	$23.4	$78.2
Capital Expenditure ($mm)	$35.2	$33.1
Net Debt ($mm)	$1,751.0 (as of 3/31)	$1,779.0 (as of 6/30)
Net Debt / Adjusted EBITDA (x)	2.2 (TTM)	2.3 (TTM)
Dividend per Share ($)	$0.34 (Feb PR)	$0.35 (raised 3% during Q2)
Shares Repurchased (mm)	~0.30	~0.34
Cash Returned ($mm)	$48.2	$47.0

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
GAAP EPS	FY 2025	$3.90–$4.40	$3.90–$4.20	Lowered high end
Adjusted EPS	FY 2025	$5.10–$5.60	$5.10–$5.40	Lowered high end
Revenue growth vs 2024	FY 2025	-2.5% to 0%	-2.0% to -0.5%	Narrowed, slightly better low end
Adjusted EBITDA margin	FY 2025	Mid-to-high 17% (implied)	Mid-17% range (explicit)	Clarified lower range
Net tariff impact	FY 2025	~$25M headwind	~$(10)M headwind	Improved
Dividend	Ongoing	$0.34/share (Feb 2025)	$0.35/share (Aug 2025)	Raised 3%

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Tariffs/macro	2H24 more challenging; cost actions underway	Net tariff headwind improved to ~$10M; pricing offset most Q2 impact; cautious H2	Improving cost impact; ongoing uncertainty
Pricing & margins	Q1: pricing <50 bps pre-tariffs; margins compressed	Pricing stepping up; 150–200 bps for FY; adj EBITDA margin mid-17% for FY	Sequential price realization accelerating
Automation/robotics	CGI acquisition; portfolio built (Rollon, Cone Drive, Spinea)	Focus on industrial, medical, humanoid robotics; bolt-on M&A optional	Strategic emphasis; multi-year growth vector
Regional trends	Q3 2024: Europe/China weak	APAC +2% (China wind up), Americas -3%, EMEA -5% with improving trend	Stabilizing; China wind up; EMEA softness lessening
Renewable/wind	Weakness in China (Q3 2024)	Stronger shipments; some H1 pull-forward; muted H2 growth expected	Recovery underway; near-term moderation
Automotive OE repricing/exit	Not detailed in Q4; CEO transition noted	Plan to impact >50% of auto OE revenue via exit/repricing; uplift expected in 2H26	Structural margin uplift in 2026
Plant footprint/ramp	Q1 cost actions; Slovakia loss in 2024	Mexico belts ramp and 3 plant closures H2; near-term headwinds, 2026 margin benefit	Near-term cost headwind; medium-term leverage

Management Commentary

Prepared remarks emphasized resilience amid uncertainty and progress on tariff mitigation: “We have implemented pricing and other actions to mitigate the impact of tariffs… driving cost initiatives to deliver resilient financial performance in 2025.”
Outlook tone: “We expect the operating environment to remain challenging in the second half… Looking further ahead, we are optimistic about 2026… position the business to capitalize on an industrial market expansion.”
Strategic focus areas: automation (industrial, medical, humanoid), backlog mid-single-digit QoQ increase, and capital allocation (dividends, repurchases) .
CFO detail: pricing offset almost all incremental tariff costs in Q2; CGI contributed ~$4M to adj EBITDA; full-year adj EBITDA margin mid-17% .

Q&A Highlights

Demand and backlog vs guide: Management trimmed H2 organic volume assumptions out of caution on trade; backlog up sequentially and July tracking near guide midpoint .
Tariff impact/mitigation: FY25 net tariff headwind now ~$10M ($0.10/share) vs prior ~$25M, with pricing actions expected to fully mitigate by year-end on a run-rate basis .
Automation/robotics: Portfolio already competitive; bolt-on M&A possible but not required; visibility improving in factory/warehouse automation; medical robotics growing (CGI) .
Automotive OE restructuring: Targeting exit/repricing of “a little more than half” of auto OE revenue; expect margin uplift starting 2H26; minimal impact Q1 2026 .
Belts/Mexico ramp and decrementals: Near-term headwinds from plant ramp and inventory change; three plant closures to reduce costs and support margin in 2026 .

Estimates Context

Consensus vs actual (Q2 2025):
- Revenue: $1.156B consensus vs $1.173B actual — bold beat.*
- Primary EPS: $1.361 consensus vs $1.42 actual — bold beat.*
- Number of estimates: EPS (11), Revenue (9).*

Metric	Consensus Q2 2025	Actual Q2 2025
Revenue ($USD Billions)	$1.156*	$1.173
Primary EPS ($)	$1.361*	$1.42
EPS - # of Estimates	11*	—
Revenue - # of Estimates	9*	—

Values marked with * retrieved from S&P Global.

Implication: Street models likely need to reflect lower FY25 high-end EPS and mid-17% margin trajectory, while pricing/tariff mitigation reduce downside; 2026 uplift drivers (auto OE actions, plant closures) may warrant higher medium-term margin and EPS estimates .

Key Takeaways for Investors

Q2 print was resilient with revenue and adjusted EPS beats despite softer volumes and tariffs; pricing actions and CGI accretion supported results .*
Guidance trimmed on the top end; management cautious on H2 demand given trade uncertainty, but backlog and pricing momentum are constructive into 2026 .
Tariff headwind improving faster-than-expected (~$10M vs ~$25M prior); price actions nearly offset Q2 tariffs, targeting full mitigation by year-end run rate .
Segment margins compressed YoY (EB 19.7%, IM 18.3%); near-term headwinds from belts ramp and mix, but structural cost actions (three plant closures) should bolster 2026 margins .
Automation/robotics is a multi-year growth vector (industrial/medical/humanoid); portfolio already competitive with optional bolt-on M&A flexibility .
Capital allocation remains shareholder-friendly: dividend raised 3% to $0.35 and continued buybacks amid strong cash generation (CFO $111M; FCF $78M) .
Trading setup: Near-term sentiment hinges on H2 demand trajectory and tariff developments; upside catalysts include backlog conversion, pricing realization, and clarity on auto OE actions; medium-term thesis supported by structural margin uplift in 2026 .

All document-based facts are cited to Timken’s Q2 2025 press release, 8-K, and earnings call transcript. Consensus estimates values marked with * are retrieved from S&P Global.

TIMKEN CO (TKR)·Q2 2025 Earnings Summary