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TKR Q3 Earnings Beat, Increase Y/Y on Pricing and Tariff Refunds
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Key Takeaways
TKR's Q3 adjusted EPS rose 20.4% to $1.65, beating estimates by 12.24%, while revenues grew 4.7%.
Timken's margins expanded on favorable pricing, higher sales volumes and $12.4 million in tariff refunds.
TKR raised its 2026 adjusted EPS outlook to $6.35-$6.50, with revenues expected to grow approximately 5.5%.
The Timken Company (TKR - Free Report) reported third-quarter 2026 adjusted earnings per share (EPS) of $1.65, beating the Zacks Consensus Estimate of $1.47 by 12.24%. The bottom line increased 20.4% year over year, supported by favorable pricing, higher volumes in Industrial Motion and tariff refunds, partially offset by higher operating costs.
Including one-time items, earnings were $1.34 per share compared with 99 cents in the year-ago quarter.
Total revenues increased 4.7% year over year to $1.211 billion but missed the consensus estimate of $1.215 billion. Organic sales rose 2.8% in the quarter.
The Timken Company Price, Consensus and EPS Surprise
The cost of sales increased 2.1% year over year to $825 million. Gross profit rose 10.7% to $386.4 million, while gross margin expanded to 31.9% from 30.2% in the prior-year quarter.
Selling, general and administrative expenses increased 7.3% to $200.1 million. Operating income climbed 19.1% year over year to $166 million. Operating margin improved to 13.7% from 12% in the year -ago quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 11.4% year over year to $224.6 million. Adjusted EBITDA margin expanded 110 basis points to 18.5% from 17.4%.
The improvement reflected positive price-cost performance, higher sales volumes and favorable foreign currency movements. A $12.4 million net benefit from International Emergency Economic Powers Act (IEEPA) tariff refunds also supported results. These gains were partially offset by increased manufacturing, material, logistics and other operating costs.
Timken's Segment Performance in Q3
The Engineered Bearings segment's revenues increased 0.7% year over year to $771.4 million. The improvement was primarily driven by higher pricing and slightly favorable foreign currency translation. Organic sales increased 0.5%.
The segment's adjusted EBITDA rose 8% to $155.8 million from $144.2 million in the year-ago quarter. Adjusted EBITDA margin expanded to 20.2% from 18.8%, reflecting tariff refunds, favorable price/mix and currency benefits, partially offset by higher operating costs.
The Industrial Motion segment's revenues increased 12.4% year over year to $440 million, supported by higher demand across most end markets, contributions from the Bijur Delimon acquisition and improved pricing. Organic sales increased 7.3%.
The segment's adjusted EBITDA increased 16.8% to $87 million from $74.5 million a year earlier. Adjusted EBITDA margin improved to 19.8% from 19%, benefiting from higher volumes, favorable price/mix and acquisition contributions, partly offset by increased operating costs.
TKR Advances Portfolio Optimization Strategy
Timken completed the sale of its belts business to Gates Industrial Corporation Ltd. The divestiture forms part of the company's strategy to exit lower-margin operations and is expected to structurally improve Industrial Motion's adjusted EBITDA margin beginning in the fourth quarter.
The company also advanced its Elevate to Outperform strategy, focusing on portfolio optimization, strategic growth markets and operational efficiencies. Timken completed a minority investment in an early-stage electroadhesive technology manufacturer to support its automation growth initiatives.
Timken's Cash Flow and Balance Sheet Updates
Timken generated $256.1 million in operating cash flow during the third quarter, up 27.3% year over year. Free cash flow increased 35.2% to $221.4 million, while capital expenditures declined to $34.7 million from $37.3 million.
Cash and cash equivalents totaled $410.2 million as of Sept. 30, 2026, compared with $364.4 million at the end of 2025. Long-term debt decreased to $1.75 billion from $1.88 billion. Net debt to adjusted EBITDA improved to 1.7 from 2.0 at 2025-end. During the quarter, Timken repurchased approximately 505,000 shares and returned $88.7 million to shareholders through dividends and buybacks. The company also paid its 417th consecutive quarterly dividend of 36 cents per share.
TKR Raises 2026 Earnings Outlook
Timken raised its full-year 2026 adjusted EPS guidance to $6.35-$6.50 from the previously stated guidance of $6.05-$6.35. The midpoint indicates approximately 20.5% growth from the 2025 adjusted EPS of $5.33.
The company expects full-year revenues to increase approximately 5.5%, including organic growth of 3.5%. Adjusted EBITDA margin is projected in the mid-18% range compared with 17.4% in 2025.
Free cash flow guidance remains unchanged at $375-$400 million. Management expects mid-single-digit organic sales growth in 2027, supported by strategic initiatives and improving industrial market demand.
TKR Stock’s Price Performance
TKR shares have fallen 16.5% in the past six months compared with the industry’s 22.8% decline.
Applied Industrial (AIT - Free Report) reported earnings of $2.97 per share for the first quarter of fiscal 2027 (ended Sept. 30, 2026), beating the Zacks Consensus Estimate of $2.86 by 3.8%. Earnings rose 12.7% year over year.
Applied Industrial’s net sales of $1.291 billion exceeded the consensus estimate of $1.286 billion by 0.4% and grew 7.6% year over year.
RBC Bearings (RBC - Free Report) reported second-quarter fiscal 2027 (ended Sept. 30, 2026) adjusted earnings of $3.74 per share, which beat the Zacks Consensus Estimate of $3.55. This was 30% higher than the earnings of $2.88 per share reported in the year-ago quarter.
RBC Bearings’ revenues increased 5% year over year to $524.6 million, surpassing the Zacks Consensus Estimate of $516 million. This compares with year-ago revenues of $455.3 million.
Regal Rexnord (RRX - Free Report) reported earnings per share of $2.90 in the third quarter of fiscal 2026, beating the Zacks Consensus Estimate of $2.69. The figure came in 16% higher than the earnings of $2.51 per share a year ago.
Regal Rexnord reported revenues of $1.59 billion for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 1.82%. This compares with year-ago revenues of $1.5 billion.
View the Zacks #1 Rank List
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TKR Q3 Earnings Beat, Increase Y/Y on Pricing and Tariff Refunds
Key Takeaways
The Timken Company (TKR - Free Report) reported third-quarter 2026 adjusted earnings per share (EPS) of $1.65, beating the Zacks Consensus Estimate of $1.47 by 12.24%. The bottom line increased 20.4% year over year, supported by favorable pricing, higher volumes in Industrial Motion and tariff refunds, partially offset by higher operating costs.
Including one-time items, earnings were $1.34 per share compared with 99 cents in the year-ago quarter.
Total revenues increased 4.7% year over year to $1.211 billion but missed the consensus estimate of $1.215 billion. Organic sales rose 2.8% in the quarter.
The Timken Company Price, Consensus and EPS Surprise
Timken Company (The) price-consensus-eps-surprise-chart | Timken Company (The) Quote
TKR Reports Margin Expansion in Q3
The cost of sales increased 2.1% year over year to $825 million. Gross profit rose 10.7% to $386.4 million, while gross margin expanded to 31.9% from 30.2% in the prior-year quarter.
Selling, general and administrative expenses increased 7.3% to $200.1 million. Operating income climbed 19.1% year over year to $166 million. Operating margin improved to 13.7% from 12% in the year -ago quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 11.4% year over year to $224.6 million. Adjusted EBITDA margin expanded 110 basis points to 18.5% from 17.4%.
The improvement reflected positive price-cost performance, higher sales volumes and favorable foreign currency movements. A $12.4 million net benefit from International Emergency Economic Powers Act (IEEPA) tariff refunds also supported results. These gains were partially offset by increased manufacturing, material, logistics and other operating costs.
Timken's Segment Performance in Q3
The Engineered Bearings segment's revenues increased 0.7% year over year to $771.4 million. The improvement was primarily driven by higher pricing and slightly favorable foreign currency translation. Organic sales increased 0.5%.
The segment's adjusted EBITDA rose 8% to $155.8 million from $144.2 million in the year-ago quarter. Adjusted EBITDA margin expanded to 20.2% from 18.8%, reflecting tariff refunds, favorable price/mix and currency benefits, partially offset by higher operating costs.
The Industrial Motion segment's revenues increased 12.4% year over year to $440 million, supported by higher demand across most end markets, contributions from the Bijur Delimon acquisition and improved pricing. Organic sales increased 7.3%.
The segment's adjusted EBITDA increased 16.8% to $87 million from $74.5 million a year earlier. Adjusted EBITDA margin improved to 19.8% from 19%, benefiting from higher volumes, favorable price/mix and acquisition contributions, partly offset by increased operating costs.
TKR Advances Portfolio Optimization Strategy
Timken completed the sale of its belts business to Gates Industrial Corporation Ltd. The divestiture forms part of the company's strategy to exit lower-margin operations and is expected to structurally improve Industrial Motion's adjusted EBITDA margin beginning in the fourth quarter.
The company also advanced its Elevate to Outperform strategy, focusing on portfolio optimization, strategic growth markets and operational efficiencies. Timken completed a minority investment in an early-stage electroadhesive technology manufacturer to support its automation growth initiatives.
Timken's Cash Flow and Balance Sheet Updates
Timken generated $256.1 million in operating cash flow during the third quarter, up 27.3% year over year. Free cash flow increased 35.2% to $221.4 million, while capital expenditures declined to $34.7 million from $37.3 million.
Cash and cash equivalents totaled $410.2 million as of Sept. 30, 2026, compared with $364.4 million at the end of 2025. Long-term debt decreased to $1.75 billion from $1.88 billion. Net debt to adjusted EBITDA improved to 1.7 from 2.0 at 2025-end.
During the quarter, Timken repurchased approximately 505,000 shares and returned $88.7 million to shareholders through dividends and buybacks. The company also paid its 417th consecutive quarterly dividend of 36 cents per share.
TKR Raises 2026 Earnings Outlook
Timken raised its full-year 2026 adjusted EPS guidance to $6.35-$6.50 from the previously stated guidance of $6.05-$6.35. The midpoint indicates approximately 20.5% growth from the 2025 adjusted EPS of $5.33.
The company expects full-year revenues to increase approximately 5.5%, including organic growth of 3.5%. Adjusted EBITDA margin is projected in the mid-18% range compared with 17.4% in 2025.
Free cash flow guidance remains unchanged at $375-$400 million. Management expects mid-single-digit organic sales growth in 2027, supported by strategic initiatives and improving industrial market demand.
TKR Stock’s Price Performance
TKR shares have fallen 16.5% in the past six months compared with the industry’s 22.8% decline.
Image Source: Zacks Investment Research
Timken’s Zacks Rank
Timken currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Performance of TKR’s Peers
Applied Industrial (AIT - Free Report) reported earnings of $2.97 per share for the first quarter of fiscal 2027 (ended Sept. 30, 2026), beating the Zacks Consensus Estimate of $2.86 by 3.8%. Earnings rose 12.7% year over year.
Applied Industrial’s net sales of $1.291 billion exceeded the consensus estimate of $1.286 billion by 0.4% and grew 7.6% year over year.
RBC Bearings (RBC - Free Report) reported second-quarter fiscal 2027 (ended Sept. 30, 2026) adjusted earnings of $3.74 per share, which beat the Zacks Consensus Estimate of $3.55. This was 30% higher than the earnings of $2.88 per share reported in the year-ago quarter.
RBC Bearings’ revenues increased 5% year over year to $524.6 million, surpassing the Zacks Consensus Estimate of $516 million. This compares with year-ago revenues of $455.3 million.
Regal Rexnord (RRX - Free Report) reported earnings per share of $2.90 in the third quarter of fiscal 2026, beating the Zacks Consensus Estimate of $2.69. The figure came in 16% higher than the earnings of $2.51 per share a year ago.
Regal Rexnord reported revenues of $1.59 billion for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 1.82%. This compares with year-ago revenues of $1.5 billion.