10-Q - TIMKEN CO (0000098362) (Filer)

Wed, Apr 30, 7:34 PM (18 days ago)

**The Timken Company (TKR) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** $1,140.3 million, a 4.2% decrease from Q1 2024 ($1,190.3 million). - **Net Income:** $91.4 million, a 17.4% decrease from Q1 2024 ($110.6 million). - **Earnings per Share (EPS):** Diluted EPS of $1.11, a 24% decrease from Q1 2024 ($1.46). - **Operating Income:** $144.0 million, a 22% decrease from Q1 2024 ($184.6 million). - **Profit Margins:** Operating margin decreased to 12.6% from 15.5% in Q1 2024. - **Cash Flow:** Net cash provided by operating activities increased to $58.6 million from $49.3 million in Q1 2024. **Segment Performance:** - **Engineered Bearings:** Revenue decreased by 5.2% to $760.7 million. Adjusted EBITDA decreased by 12.2% to $159.2 million. - **Industrial Motion:** Revenue decreased by 2.1% to $379.6 million. Adjusted EBITDA decreased by 18.3% to $67.1 million. **Key Metrics and Trends:** - **Impairment and Restructuring Charges:** Increased significantly to $10.9 million due to severance related to CEO transition. - **Interest Expense:** Decreased by 17.7% to $26.5 million. - **Tax Expense:** Decreased by 37% to $26.9 million due to lower pre-tax earnings and favorable discrete items. - **Cash and Cash Equivalents:** Increased to $376.1 million, with $355.1 million held outside the U.S. **Outlook and Uncertainties:** - **Revenue and Earnings:** Expected to decrease in 2025 due to lower demand, higher tariffs, and unfavorable foreign currency exchange rates. - **Cash Flow:** Expected to increase due to improved working capital performance and lower capital expenditures. - **Capital Expenditures:** Expected to be around 3.5% of sales. - **Tariffs:** Imposition of import tariffs by the U.S. government expected to adversely impact operating income. **Future Operations Impact:** - **Strategic Initiatives:** Focus on profitable growth, operational excellence, and capital deployment to drive shareholder value. - **CEO Transition:** Richard G. Kyle appointed as interim President and CEO following Tarak B. Mehta's departure. **Liquidity and Capital Resources:** - **Net Debt:** $1,751.0 million, with a net debt to capital ratio of 36.2%. - **Credit Facilities:** $820.0 million available under committed credit lines. - **Debt Compliance:** In full compliance with all applicable covenants on outstanding debt. **Risk Factors:** - **Economic Conditions:** Global economic slowdown, trade disputes, and geopolitical risks. - **Operational Risks:** Supply chain disruptions, changes in customer demand, and competitive factors. - **Regulatory Risks:** Changes in global regulatory landscape, including environmental and climate change regulations. **Conclusion:** The Timken Company faced challenges in Q1 2025 with decreased revenue and earnings, primarily due to lower demand and higher impairment charges. However, the company remains focused on strategic initiatives to drive future growth and maintain strong liquidity. The outlook for 2025 includes expectations of decreased revenue and earnings, but improved cash flow and capital expenditures management.