Timken Company (TKR) Q4 2025 earnings summary

Executive summary

• Fourth quarter 2025 results exceeded expectations, with adjusted EPS of $1.40, sales up 3.5% year-over-year, and strong free cash flow growth, driven by Industrial Motion segment performance and higher pricing.

• Ended 2025 with a strong balance sheet, net leverage at 2x, and increased backlog; shares were repurchased and over $100 million in debt was reduced.

• Strategic initiatives included expanding 80/20 portfolio discipline, exiting underperforming businesses, and focusing on high-growth verticals and regions.

• New leadership roles and a CEO transition in 2025 aimed to drive innovation and align with growth drivers.

• Full-year 2025 sales were $4.58 billion, up 0.2%, with organic sales down 1.0% due to lower end-market demand.

Financial highlights

• Q4 2025 revenue was $1.11 billion, up 3.5% year-over-year (1.3% organic), with adjusted EBITDA margin at 16%.

• Adjusted EBITDA for Q4 was $177.8 million, flat year-over-year; full-year adjusted EBITDA was $796 million (17.4% margin).

• Free cash flow for Q4 was $140.7 million, up from $125 million in 2024; full-year free cash flow reached $406 million.

• Net debt reduced by over $130 million in 2025; net debt/adjusted EBITDA at 2.0x.

• Returned $155.7 million to shareholders via dividends and share repurchases in 2025.

Outlook and guidance

• 2026 revenue expected to increase 2%-4%, with organic growth at 2% midpoint and currency contributing ~1%.

• Adjusted EPS guidance for 2026 is $5.50-$6.00, up 8% at midpoint; adjusted EBITDA margin projected in the high 17% range.

• Free cash flow for 2026 projected at ~$350 million, with ~105% conversion on GAAP net income.

• Q1 2026 organic sales and adjusted EBITDA margins expected to be flat year-over-year.

• 2026 organic sales growth expected at 2% midpoint, with both volumes and pricing up.