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Timken raised its 2026 adjusted EPS outlookto $6.35–$6.50, while keeping its revenue and free-cash-flow forecasts unchanged. Q3 revenue rose 4.7% to $1.21 billion and adjusted EPS increased 20% to $1.65; tariff refunds contributed about $12 million, or $0.13 per share, to adjusted results.
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Industrial Motion led segment growth, with revenue up 12.4% and organic sales up 7.3%, supported by aerospace and defense, linear motion, and the Bijur Delimon acquisition. China wind weakness weighed on Engineered Bearings and overall growth, but organic sales excluding China wind increased at mid-single-digit rates.
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Management said it expects mid-single-digit organic sales growth in 2027, citing automation and robotics, aerospace and defense, and a growing backlog. The belts business sale is expected to lift Industrial Motion's EBITDA margin by more than 200 basis points in 2027.
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Timken (NYSE:TKR) raised its 2026 adjusted earnings outlook after third-quarter sales and margins improved, helped in part by tariff refunds and stronger demand in its Industrial Motion business.
The company reported revenue of $1.21 billion, up 4.7% from a year earlier, while organic sales rose 2.8%. Adjusted earnings per share increased 20% to $1.65, and adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, rose to 18.5% of sales from 17.4%.
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Chief Financial Officer Mike Discenza said adjusted results included a net benefit of approximately $12 million, or $0.13 per share, from refunds of tariffs imposed under the International Emergency Economic Powers Act. Pricing also contributed to the quarter's performance, adding approximately 1% to revenue, he said.
President and CEO Lucian Boldea said demand improved across most industrial markets, although a significant decline in China wind energy sales weighed on growth. Excluding China wind, Timken's organic sales increased by mid-single digits, he said.
Industrial Motion Drives Growth
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Industrial Motion revenue rose 12.4% to $440 million, including organic growth of 7.3%. The Bijur Delimon acquisition added more than 5% to the segment's sales, Discenza said. Aerospace and defense revenue rose nearly 20%, while linear motion systems posted double-digit growth.
The segment's adjusted EBITDA margin expanded 80 basis points to 19.8%, helped by higher volumes and favorable price mix.
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Engineered Bearings sales rose 0.7% to $771 million, with organic growth of 0.5%. Pricing drove the increase as volumes were relatively flat. Aerospace and defense was the segment's strongest market, but power and electrification sales fell by double digits because of lower China wind revenue. Excluding China wind, segment organic sales grew more than 3%, Discenza said.
Engineered Bearings' adjusted EBITDA margin rose to 20.2% from 18.8%, benefiting from tariff refunds and favorable price mix, partially offset by higher operating costs.
Higher Earnings Outlook and Early 2027 View
Timken increased its full-year adjusted earnings forecast to $6.35 to $6.50 per share. The midpoint represents 20% growth from 2025. Discenza said most of the increase reflected third-quarter outperformance, including tariff refunds; a lower net interest expense outlook added another $0.08 per share compared with the prior forecast.
The company maintained its outlook for approximately 5.5% total revenue growth and 3.5% organic growth at the midpoint. It also kept its free cash flow forecast at $375 million to $400 million. Discenza reported third-quarter free cash flow of $221 million, while Boldea said earlier in the call that it exceeded $228 million.
For 2027, Boldea said Timken currently expects mid-single-digit organic sales growth, though he emphasized that it was not a formal forecast. The expectation includes the effect of planned automotive original-equipment exits. Most of the revenue from those exits is expected to be lost in 2028, he said.
Boldea identified automation and robotics as the leading anticipated growth area, followed by aerospace and defense. The company's overall backlog grew sequentially and was up mid-single digits from a year earlier, he said.
Management expects China wind sales to decline both sequentially and year over year in the fourth quarter. Discenza said the business is expected to represent a low-single-digit percentage of Timken's total 2026 sales and should not significantly affect the full-year 2027 outlook.
Portfolio Changes and Customer Focus
Timken completed the sale of its belts business near the end of the third quarter. Boldea said the divestiture is expected to increase Industrial Motion's EBITDA margin by more than 200 basis points in 2027.
The company is also using its 80/20 initiative to reduce complexity and focus resources on priority customers. Boldea said recent actions include setting minimum order values and developing account plans to sell more products and services to large customers. He expects the initiative to become a net benefit in 2027 after implementation and training costs weighed on results earlier this year.
Timken also made a minority investment in an early-stage electroadhesive technology manufacturer. Boldea described a potential use for the technology as holding a position efficiently in applications such as humanoid robotics. He said future acquisitions would remain focused on bolt-on deals aligned with the company's target markets.
During the quarter, Timken repurchased more than 500,000 shares. Discenza said the company returned $89 million to shareholders through buybacks and dividends and ended the period with net debt of 1.7 times adjusted EBITDA.
About Timken (NYSE:TKR)
Timken is a global manufacturer of engineered bearings and industrial motion products. Its offerings include bearings, seals, lubrication systems, chains, belts, couplings and related components designed to support the movement and operation of industrial equipment.
The company serves customers across a range of industries, including aerospace, agriculture, construction, energy, rail, mining and manufacturing. In addition to products, Timken provides services such as equipment repair and maintenance to help customers manage machinery performance.
Founded in 1899 by Henry Timken, the company developed its business around tapered roller bearings.
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The article " What Timken (TKR) Said on Its Q3 Earnings Call " was originally published by MarketBeat.
